ELMER  ROBERTS 


MONARCHICAL  SOCIALISM 
IN  GERMAN^7   "™™ 


Uiijilil!  li 


! 


MONARCHICAL 
SOCIALISM  IN  GERMANY 


/MONARCHICAL 
SOCIALISM  IN  GERMANY 


BY 

ELMER  ROBERTS 


NEW  YORK 

CHARLES   SCRIBNER'S  SONS 
1913 


COPTEIGHT,  1913,  BT 
CHABLES  SCRIBNER'S  SONS 


Published  March,  1913 


CONTENTS 

CHAPTER  PAGE 

I.    STATE-OWNED  ENTERPRISES 1 

II.    GERMAN  RAILWAY  POLICY 17 

III.  THE  PASSING  OF  THE  UNSKILLED      ...  33 

IV.  LABOR  EXCHANGES  IN  GERMANY  ....  53 

V.    EXPERIMENTS  WITH  UNEMPLOYMENT  INSUR- 
ANCE     72 

VI.    GOOD-WILL  TOWARD  TRUSTS 89 

VII.    TAXING  THE  INCREASE  IN  LAND  VALUES  .     .  109 

VIII.    MONARCHICAL  VERSUS  RED  SOCIALISM  .    .  116 

IX.    LOOKING  TOWARD  THE  FUTURE      ....  135 

X.    EMPEROR  WILLIAM  II 144 

XI.    SOME  REFLECTIONS  ON  THE  GROWTH  OF  THE 

GERMAN  NAVY 153 

XII.    THE  PLAY  INSTINCT  IN  GERMANY      .    .    .  168 

APPENDICES: 

A.  Notes  on  the  Compulsory  Insurances 

of  Germany 179 

B.  Programme  of  the  Social-Democratic 

Party 185 

C.  William  II  and  Americans    ....  191 


STATE-OWNED  ENTERPRISES 

THE  motive  of  this  writing  is  to  convey 
some  notion  of  the  extent  in  which  the 
associated  monarchies,  forming  the  Ger- 
man imperial  state,  are  engaged  in  profit-yield- 
ing undertakings  that  in  other  states  are  usually 
left  entirely  to  persons  and  companies,  and  also 
to  give  some  account  of  other  social  and  eco- 
nomic experiments.  Americans  are  acquainted 
with  the  aims  of  the  Social-Democratic  party, 
the  revolutionary  socialism  of  Germany,  with 
four  and  a  quarter  millions  of  voters,  organized, 
irreconcilable,  aflame  with  zeal.  That  might  be 
called  the  paper  socialism  in  Germany.  Perhaps 
"paper  socialism"  is  too  light  a  phrase  to  use  to- 
ward a  force  so  formidable  and  so  implacable. 

It  is,  however,  the  doctrinaire  socialism  of  Ger- 

i 


2          MONARCHICAL  SOCIALISM 

many  that  has  not  yet  passed  a  law,  nor  admin- 
istered a  parish.  The  socialism  in  being,  the 
only  collective  ownership  of  mines,  railways, 
lands,  forests,  and  other  instruments  of  produc- 
tion, is  monarchical  socialism,  existent  by  acts  of 
the  crown  in  co-operation  with  conservative  par- 
liamentary majorities. 

The  imperial  government  and  the  govern- 
ments of  the  German  states  took  profits  in  1911 
from  the  various  businesses  conducted  by  them, 
of  $282,749,224.  Estimating  the  capital  value 
at  a  4  per  cent  ratio,  the  value  of  the  produc- 
tive state-owned  properties  is  $7,068,729,600. 
Roundly,  the  governments  operate  dividend- 
yielding  works,  lands,  and  means  of  communica- 
tion worth  $7,000,000,000,  and  the  governments 
continue  to  follow  a  policy  of  fresh  acquisitions. 
Taking  the  federated  states  together,  38  per  cent 
of  all  the  financial  requirements  for  govern- 
mental purposes  were  met  last  year  out  of  prof- 
its on  government-owned  enterprises.  Including 
the  imperial  government,  a  new-comer  with  rela- 
tively few  possessions,  about  one-quarter  of  all 
the  expenses  of  the  state  and  the  imperial  gov- 
ernments for  the  army,  the  navy,  and  for  all 
other  purposes,  were  paid  out  of  the  net  profits 
on  government  businesses.  Among  the  under- 


STATE-OWNED  ENTERPRISES        3 

takings  are  no  tobacco,  spirit,  or  match  monopo- 
lies. 

The  miniature  ducal  monarchy  of  Schaum- 
burg-Lippe,  with  a  population  of  44,992,  and  an 
area  of  131  square  miles,  made  $12,008  from 
property  owned  collectively,  or  5  per  cent  of  the 
requirements  of  the  state.  The  still  smaller  prin- 
cipality of  Reuss,  the  elder,  with  122  square  miles 
area,  and  a  population  of  70,603,  has  an  income 
of  $10,000,  the  smallest  actually,  and  the  small- 
est in  proportion,  of  any  of  the  German  states. 
The  little  neighbor  of  Reuss,  Schwarzburg-Ru- 
dolstadt,  has  $350,000,  or  close  to  one-half  all 
the  public  requirements,  derived  from  state  do- 
mains and  mines.  Schwarzburg-Sonderhausen 
draws  33  per  cent  of  the  budget  from  farms  and 
forests;  Oldenburg,  22  per  cent;  Mecklenburg- 
Strelitz,  49.14  per  cent.  But  it  is  the  great 
states  of  the  empire  where  state  management  of 
large  properties  shows  the  more  important  re- 
sults. Bavaria  pays  39  per  cent  of  all  the  ad- 
ministrative costs  from  public-owned  properties; 
Saxony,  31  per  cent;  Wiirtemberg,  38.7  per  cent; 
and  Prussia,  47.36  per  cent.  Prussia,  which 
forms  about  five-eighths  of  the  empire,  has  a 
constantly  increasing  revenue  from  state-owned 
enterprises,  which  yielded,  in  1911,  net  returns 


4          MONARCHICAL  SOCIALISM 

of  about  $178,000,000,  or  more  than  twice  the 
state's  income  from  taxes,  which  was  $85,452,- 
000 ;  the  average  income  from  taxation  per  capita 
was  18.1  marks;  while  the  average  per  capita  ta- 
ken in  taxation  was  8.7  marks.  In  that  year 
the  state,  owing  to  extensions  in  canals,  railways, 
and  other  public  works,  raised  by  loans  what 
amounted  to  an  average  per  capita  of  7.1 
marks.  The  state  income  from  public  properties 
amounted  to  somewhat  more  than  the  total  in- 
come from  taxation  and  from  borrowings.  The 
railways  were  the  largest  source  of  income,  and 
netted  $151,782,000,  or  about  8  per  cent  on  the 
total  invested  by  Prussia  in  its  railway  system 
since  the  state  began  to  buy  and  build  railways, 
in  1848-49.  Prussia  derived  from  other  sources, 
from  its  crown  forests,  the  leased  farms,  the  iron, 
coal,  potash,  salt,  and  other  mines,  the  porcelain 
factories,  banking,  and  a  variety  of  less  impor- 
tant industries,  $27,200,000.  The  policy  of  Prus- 
sia, which  dominates  the  empire,  is  strongly  in 
the  direction  of  increasing  the  participation  of 
the  government  in  industrial  enterprises.  The 
Prussian  legislature,  acting  upon  a  recommenda- 
tion of  the  Emperor,  in  the  speech  from  the 
throne  at  the  opening  of  the  diet  in  1906,  passed 
a  bill  extending  widely  an  old  act,  giving  the 


STATE-OWNED  ENTERPRISES        5 

state  the  right  to  take  over  at  a  valuation  any 
discovery  of  mineral  riches  on  private  lands. 

German  manufacturing  and  mining  is  rather 
more  completely  under  the  control  of  combina- 
tions than  is  the  industry  of  any  other  country. 
The  closely  organized  syndicates  in  the  coal  and 
iron  industries  control  production  and  selling 
prices  more  effectively  than  does  the  United 
States  Steel  Corporation  in  the  United  States. 
The  Prussian  Government,  in  its  desire  to  have 
a  seat  in  the  coal  syndicate,  determined  five 
years  ago  to  buy  a  controlling  interest  in  the 
shares  of  the  Hibernia  Coal  Company,  mining 
7  per  cent  of  the  coal  in  the  Rhine- Westphalian 
region.  The  Dresdner  Bank,  acting  under  a 
private  arrangement  with  the  Prussian  treasury, 
bought  shares  on  the  stock-exchange  until  a  ma- 
jority of  the  capitalization  had  been  acquired. 
The  announcement  that  Prussia  had  bought  the 
control  of  the  company  so  vexed  the  group  of 
coal-owners  who  had  previously  ruled  the  com- 
pany that  they  increased  the  capitalization,  and 
issued  the  new  shares  to  themselves,  thus  reac- 
quiring  a  majority.  The  Prussian  Government 
brought  a  suit  to  pronounce  the  new  issue  illegal, 
but  since  the  intermediate  courts  and  the  su- 
preme court  of  the  empire  have  decided  against 


6          MONARCHICAL  SOCIALISM 

the  Prussian  contention,  the  matter  has  been 
dropped,  so  far  as  the  Hibernia  Company  is 
concerned.  The  policy  of  Prussia  remains  un- 
changed, and  further  efforts,  it  is  publicly  under- 
stood, will  be  made  by  the  government  to  obtain 
a  vote,  not  only  in  the  coal,  but  in  the  steel 
and  other  master  syndicates.  The  theory  of  the 
Prussian  cabinet  and  the  crown  is,  that  it  is  for 
the  interests  of  the  people  that  the  state  should 
take  part  in  industrial  combinations  that  under- 
take to  regulate  the  prices  of  articles,  or  the  pro- 
duction hi  any  industry.  Public  opinion  sup- 
ports this  principle. 

Besides  the  productive  ownerships  of  the  em- 
pire, and  of  the  individual  states,  the  cities  of 
Germany  have  gone  deeply  into  street  railways, 
gas,  electricity,  water-works,  slaughter-houses, 
market  halls,  cold  storage,  canals,  and  wharfs. 
Thus  the  republic  of  Liibeck  pays  18.29  per  cent 
of  its  expenses  from  such  sources,  Hamburg,  4.25 
per  cent,  and  Bremen,  6.07  per  cent.  It  is  a  fact 
of  some  interest  that  the  republics  among  the 
states  of  the  empire  are  far  more  backward  in 
communal  ownership  than  are  the  monarchies. 

A  summary  of  the  government-owned  prop- 
erties and  the  income  derived  from  them  is  sub- 
joined: 


STATE-OWNED  ENTERPRISES 


VALUES 

RET  INCOMES 

Farms  

$198,122,725 

$7,925,309 

Forests        ... 

730,898,200 

29,235  928 

Mines  

128,907,725 

5,116,309 

Railways  

4,757,579,750 

191,943,190 

"Telegraphs 
"Telephones 

694,816,650 

27,792,666 

"Express  packages 
"Mails 
Other  works  

435,184,900 

17,407,476 

"These  services  are  government  monopolies. 

Upon  no  department  of  industry  do  any  of  the 
state  governments  lose  except  upon  steamers. 
The  grand  duchy  of  Baden  runs  its  internal  navi- 
gation lines  at  a  loss  of  about  $15,000  yearly. 
Saxony,  Wiirtemberg,  and  Mecklenburg-Schwe- 
rin  gain  on  their  lines  some  $7,000  annually,  so 
that  on  the  whole  of  the  state-owned  steamer 
lines  there  is  a  loss  of  $8,000. 

This  structure  of  collective  ownership,  which  I 
have  called  monarchical  socialism,  rests  upon  a 
way  of  thinking  in  Germany  which  differenti- 
ates the  social  and  political  conditions  there  from 
those  of  any  other  great  industrial  state.  The 
representatives  of  the  monarchical  principle  in 
association  with  the  conservative  classes  have 
accepted  this  way  of  thinking,  and  it  has  entered 
into  the  very  texture  of  their  ideas  of  govern- 


8          MONARCHICAL  SOCIALISM 

ment,  and  is  supported  by  the  great  orthodox 
economists,  such  as  Schmoller  and  Wagner. 
The  policy  of  acquiring  and  managing  industries, 
lands,  mines,  and  means  of  communication  by 
the  government  is  so  vital  and  living  a  part  of 
the  German  empire,  the  subordinate  states,  and 
the  parishes,  that  it  is  slowly  making  Germany 
fundamentally  different  industrially  and  politi- 
cally from  the  United  States,  Great  Britain, 
France,  or  any  country  that  comes  into  com- 
parison with  Germany. 

The  American  or  the  Englishman,  when  talking 
with  a  German  about  social  or  political  questions, 
finds  that  he  and  the  German  are  looking  at 
things  from  different  basal  conceptions  of  the 
functions  of  government.  The  Englishman  has 
that  background  of  eight  centuries,  during  which 
his  race  has  developed  individual  liberty,  and  has 
given  free  political  institutions,  or  some  form  of 
them,  to  all  other  modern  states,  including  Ger- 
many. A  social  system  has  been  developed 
whose  key-idea  is  to  give  the  citizen  free  play  to 
his  individuality.  The  system  has  worked  well 
and  continues  to  work  in  the  United  Kingdom, 
the  great  British  colonial  states,  and  in  America. 
The  German,  while  modified  by  the  individualist 
school  of  thinking,  has  grown  up  among  a  differ- 


STATE-OWNED  ENTERPRISES       9 

ent  order  of  ideas  prevailing  on  the  Continent, 
derived  in  part  from  Roman  law  and  from  auto- 
cratic monarchical  practice.  The  individual  has 
had  a  less  important  place  in  the  organism.  The 
strength,  welfare,  and  health  of  the  whole  has 
been  the  ruling  conception.  Hence  it  was  possi- 
ble for  an  enlightened  society,  such  as  that  in 
France,  to  have  a  vigorous  sincere  party  urging, 
during  the  Dreyfus  trial,  that  it  were  better  for 
an  individual  to  suffer  wrong  than  for  the  state 
to  be  weakened  by  loss  of  respect  for  the  French 
army.  The  English  point  of  view  would  be  that 
it  were  better  for  a  state  that  could  not  give  an 
individual  justice  to  perish  in  the  endeavor  to  do 
so  than  for  society  to  maintain  prestige  for  an 
institution  through  a  disregard  for  the  rights  of 
one  person. 

The  Hohenzollerns  in  Prussia,  and  the  mon- 
archies in  the  minor  German  states,  in  dealing 
with  the  pressure  of  their  peoples  for  greater 
political  rights,  took  into  full  consideration  the 
economic  reasons  that  caused  political  fermenta- 
tion. The  monarchies  gave  a  progressively  bet- 
ter administration,  and  undertook  the  respon- 
sibility of  protecting  the  weaker  members  of 
society  against  economic  misery.  The  so-called 
Prussian  common  law,  as  modified  by  Frederick 


10         MONARCHICAL  SOCIALISM 

William  II,  promulgated  July  1,  1794,  con- 
demned idleness,  recognized  the  right  of  every 
subject  to  work,  and  defined  the  state  to  be  the 
protector  of  the  poor.  The  common  law  pro- 
claimed: 

I.  It  is  the  duty  of  the  state  to  provide  for  the 
sustenance  and  support  of  those  of  its  subjects 
who  cannot  obtain  subsistence  for  themselves. 

II.  Work  adapted  to  their  strength  and  ca- 
pacities shall  be  supplied  to  those  who  lack 
means  and  opportunity  of  earning  a  living  for 
themselves  and  those  dependent  upon  them. 

III.  Those  who,  from  laziness,  love  of  idle- 
ness, or  other  irregular  proclivities,  do  not  choose 
to  employ  the  means  offered  them  of  earning  a 
living  shall  be  kept  at  useful  work  by  compulsion 
and  punishment,  under  proper  control. 

VI.  The  state  is  bound  to  take  such  meas- 
ures as  will  prevent  the  destitution  of  its  sub- 
jects, and  check  excessive  extravagance. 

XV.  The  police  authority  of  every  place 
must  provide  for  all  poor  and  destitute  persons, 
whose  subsistence  cannot  be  insured  in  any 
other  way. 

This  fundamental  law,  supplemented  by  the 
Stein-Hardenberg  legislation  of  the  second  dec- 
ade of  the  last  century,  was  the  foundation  upon 


STATE-OWNED  ENTERPRISES      11 

which  Bismarck  stood,  when,  on  May  9,  1884, 
in  speaking  upon  industrial  insurance,  he  pro- 
claimed the  doctrine  of  the  right  of  work: 

"Give  the  workingman  work  as  long  as  he  is 
healthy,  assure  him  care  when  he  is  sick,  insure 
him  maintenance  when  he  is  old.  Was  not  the 
right  to  work  openly  proclaimed  at  the  time  of 
the  publication  of  the  common  law?  Is  it  not 
established  in  all  our  social  arrangements,  that 
the  man  who  comes  before  his  fellow-citizens 
and  says,  'I  am  healthy,  I  desire  to  work,  but 
can  find  no  work,'  is  entitled  to  say  also,  'Give 
me  work,'  and  that  the  state  is  bound  to  give 
him  work?" 

"But  large  public  works  would  be  necessary," 
exclaimed  an  opponent. 

"Of  course,"  replied  Bismarck.  "Let  them 
be  undertaken.  Why  not?  It  is  the  state's 
duty." 

The  Bismarckian  policies,  carried  out  with  the 
full  approval  of  the  old  Emperor,  and  by  conser- 
vative majorities  in  the  Prussian  legislature  and 
the  imperial  parliament,  have  left  as  deep  an 
impression  upon  the  social  life  of  Germany  as 
his  part  in  the  unification  of  Germany.  Mod- 
ern Germany  began  with  him  to  abolish  pauper- 
ism, to  make  ordered  provision  for  indigent  old 


12         MONARCHICAL  SOCIALISM 

age,  the  sick,  and  the  disabled.  Poverty  is 
abundant  in  Germany,  but  it  does  not  shade  off 
so  quickly  into  pauperism  next-door  to  starva- 
tion as  it  does  in  the  United  Kingdom  and  in 
some  American  cities.  The  poverty  is  one  that 
can,  with  self-respect,  receive  medical  aid  or 
maintenance  of  right  from  funds  to  which  it  has 
contributed,  and  will  continue  to  contribute. 
These  measures,  while  quite  a  separate  chapter 
from  state  participation  in  industry,  are  inter- 
related, because  both  are  consequences  of  the 
dominant  school  of  political  thinking  that  finds 
stability  and  health  for  society  through  the  state 
sharing  in  business,  and  in  compulsory  provisions 
against  the  social  maladies  of  pauperism  and  the 
unemployed. 

The  aim  of  the  government  in  its  policy  of 
acquisition  and  control  of  mines,  of  communi- 
cation and  transport,  and  of  sharing,  to  some 
extent,  in  all  production  whether  agricultural, 
mineral,  or  industrial,  is  not  primarily  to  raise 
revenue.  The  declaration  of  Bismarck  upon  the 
subject  of  state  ownership  of  railways  continues 
to  be  true.  He  said: 

"I  do  not  regard  railways  as  in  the  main  in- 
tended to  be  an  object  of  financial  competition; 
according  to  my  view,  railways  are  intended 


STATE-OWNED  ENTERPRISES      13 

more  for  the  service  of  traffic  than  of  finance, 
though  it  would,  of  course,  be  foolish  to  say 
that  they  should  not  bring  financial  advantages. 
The  surpluses  which  the  states  receive  in  the 
form  of  net  profits,  or  which  go  to  shareholders 
in  the  form  of  dividends,  are  really  the  taxation 
which  the  states  might  impose  upon  the  traffic 
by  reason  of  its  privilege,  but  which,  in  the  case 
of  private  railways,  falls  to  shareholders." 

The  state  railway  systems  of  Germany  are 
managed  upon  two  general  principles.  First, 
they  are  to  serve  the  general  interests  of  domes- 
tic and  external  trade,  and  second,  they  are  to 
show  a  satisfactory  profit.  The  Prussian  rail- 
way administration  in  1910  lowered  its  regular 
freight  tariffs  for  66  per  cent  of  the  traffic,  in 
order  to  serve  the  exigencies  of  trade,  especially 
export  trade,  during  a  period  of  commercial  de- 
pression. The  government  is  in  a  position  in 
Germany  to  influence  the  whole  machinery  of 
trade  and  transportation  as  no  other  government 
in  the  world  can  do,  and  this  fact  must  be  taken 
into  account  when  other  peoples  think  of  com- 
peting on  equal  terms  with  the  Germans  in  the 
Far  East  or  in  South  America. 

The  administration  of  the  railways,  tele- 
graphs, telephones,  mines,  and  the  public  do- 


14         MONARCHICAL  SOCIALISM 

mains  by  the  state  is  possible  only  through 
trained  civil  servants.  The  efficiency  of  state- 
managed  mines  and  factories  in  competition 
with  privately  owned  enterprises  in  Germany 
comes  from  the  character  of  the  bureaucracy. 
This  permanent  civil  service  is  one  of  the  great- 
est glories  of  Germany,  and  one  of  the  most 
powerful  of  reasons  upholding  the  monarchical 
principle  in  a  semi-autocratic  form  in  Germany. 
The  Prussian  bureaucracy,  the  model  of  the 
other  German  states,  is  the  creation  of  the 
Hohenzollern  family  during  three  centuries.  It 
had  been  developed  and  improved  under  all  the 
efficient  sovereigns  of  the  Hohenzollern  line, 
such  as  the  Great  Elector  and  Frederick  the 
Great,  and  it  has  been  a  principle  of  the  private 
policy  of  the  Hohenzollern  family  to  rule  through 
a  body  of  civil  servants,  whose  place  in  the  state 
is  as  honorable  as  that  of  the  army,  or  perhaps 
it  would  be  more  just  to  say  as  ranking  next 
to  the  army.  The  non-partisan  administrative 
body,  with  its  own  disciplinary  courts  for  cutting 
out  of  the  public  service  any  member  who  uses 
his  official  position  to  favor  a  private  interest, 
either  his  own  or  that  of  another,  has  kept  the 
civil  service  up  to  a  code  of  honor  that  can  be 
compared  in  the  United  States  only  to  the  codes 


STATE-OWNED  ENTERPRISES      15 

regulating  the  army  and  the  navy.  Thus  in 
Germany  a  public  servant,  because  of  the  power 
that  his  class  possesses,  the  personal  distinction, 
and  the  social  position  that  go  with  the  public 
service,  is  willing  to  work  for  the  state  for  less 
than  he  could  receive  in  the  service  of  a  private 
company.  The  chiefs  of  technical  bureaus  in  the 
mining,  agriculture  or  forestry,  telegraph,  tele- 
phone, or  railway  services,  are  paid  from  $1,750 
to  $3,000  a  year.  The  director-general  of  the 
Alsace-Lorraine  railways  is  paid  $3,375,  and  an 
allowance  for  house-rent.  District  superintend- 
ents on  the  Prussian  lines,  each  of  whom  has 
supervision  over  from  1,500  to  2,000  miles  of 
line,  are  paid  $2,750  a  year,  with  free  dwellings. 
It  frequently  happens  that  men  in  the  govern- 
ment service,  of  unusual  capacity,  reject  offers 
from  private  concerns  of  two  or  three  times  the 
salaries  they  are  receiving.  The  officials  who 
decline  such  proposals  have  the  same  feeling 
about  them  that  a  United  States  army  engineer 
would  have.  His  pride  in  the  service,  the  sense 
of  usefulness  to  the  country,  the  social  considera- 
tion shown  to  his  service,  and  the  certainty  of 
being  promoted  regularly,  and  of  having  a  pen- 
sion upon  his  retirement,  make  the  public  ser- 
vice more  attractive  than  a  private  one  could  be. 


16         MONARCHICAL  SOCIALISM 

The  present  Emperor  has  the  passion  for  effi- 
ciency which  was  the  most  eminent  quality  in 
Frederick  the  Great.  The  Emperor  trusts,  and 
in  every  possible  manner  honors,  the  civil  servant 
who  has  done  an  exceptional  thing.  As  Mr. 
Bryce  says  of  Frederick,  it  was  not  enough  for 
this  great  man  that  a  thing  was  well  done,  but 
that  it  must  be  done  in  the  best  possible  manner. 
The  qualities  and  the  efficiencies  that  are  re- 
quired of  the  bureaucrat  have  made  it  possible 
for  the  German  Emperor  as  King  of  Prussia  to 
retain  his  autocratic  power  in  the  state  during  a 
period  when  democratic  government  has  ruled 
the  great  neighboring  states,  with  the  exception 
of  Russia,  and  during  a  period  when  Germany 
has  made  its  greatest  advances  in  culture  and  in 
industry. 


II 


GERMAN  RAILWAY  POLICY 

THE  non-German  trading  upon  a  frontier 
of  the  world  has  the  uneasy  sense  that  in 
competing  with  the  German  he  is  oppos- 
ing not  an  individual  but  a  nation.  The  Ameri- 
can in  the  Levant*  South  Africa,  or  the  Far  East 
may  be  supported  by  a  corporation  powerful  at 
home,  with  wide-spread  alliances,  yet  he  becomes 
dimly  aware  that  while  he  after  all  only  repre- 
sents an  individual  company,  somehow  behind 
his  German  competitor  is  the  German  nation  in 
a  real  and  co-operating  sense.  It  is  the  inter- 
action of  government  and  business,  the  conscious 
adjustment  by  directing  mind  of  one  part  of 
national  endeavor  with  another,  that  makes  pos- 
sible much  of  the  narrative  of  trade  conquest  told 
quarterly  in  the  thin  brochures  of  the  imperial 
statistical  office.  Tasks  of  statesmanship  in 
German  ministries,  next  to  those  of  adminis- 
tration, concentrate  on  contributions  to  the 
national  trade  policy.  The  Prussian  ministry 

of  education  has  reduced  the  unskilled  within 

17 


18         MONARCHICAL  SOCIALISM 

twenty  years  from  about  one-third  of  the  indus- 
trial army  to  one-tenth  by  directing  boys  to- 
ward learning  trades  and  by  providing  specific 
instruction.  The  protection  and  extension  of 
trade  spheres  have  become  the  vital  principle  of 
foreign  policy.  Questions  of  prestige  and  de- 
light in  playing  the  game  for  its  own  sake  have 
become  secondary.  Diplomatic  controversies  of 
this  century,  those  settled  and  those  pending,  in 
Turkey,  China,  Morocco,  Persia,  relate  to  trade 
opportunities.  The  friendly  attitudes  of  the  im- 
perial and  Prussian  Governments  toward  syn- 
dicates and  other  trade  combinations  rest  upon 
trade  considerations.  The  convincing  argument 
for  the  navy  is  security  for  the  sixteen  billions 
of  marks  planted  fruitfully  abroad.  An  inquiry 
into  each  of  these  divisions  of  trade  policy  would 
be  instructive,  especially  those  concerning  friend- 
ship with  the  syndicates,  the  measures  taken  to 
have  boys  and  girls  grow  up  into  skilled  instead 
of  raw  workers,  and  the  benefits  that  science  has 
given  to  technique.  But  in  examining  the  Ger- 
man system  with  a  purpose  to  understand  how 
it  comes  about  that  foreign  trade,  taking  good 
years  with  bad,  has  advanced  $113,000,000  each 
twelve  months  since  1897,  the  imperial  govern- 
ment's use  of  the  private  and  state-owned  rail- 


GERMAN  RAILWAY  POLICY        19 

way  has  been  to  me  the  most  amazing  and  full  of 
meaning. 

While  the  imperial  government  is  not  itself  a 
large  railroad-owner,  it  has  unified  the  policies 
and  the  charges  upon  the  state  and  privately 
owned  lines  of  the  empire  so  that  so  far  as  the 
shipper  perceives  he  is  deah'ng  with  one  trans- 
portation system  whether  the  point  of  origin  is 
on  a  line  owned  by  one  of  the  thirteen  private 
companies  or  by  Prussia,  Bavaria,  Baden,  Wiir- 
temberg,  Saxony,  or  by  the  empire  in  Alsace- 
Lorraine.  The  control  of  the  rates  is  centralized 
under  the  Bundesrat,  the  Senate  as  it  were,  con- 
sisting of  members  appointed  by  the  govern- 
ments of  the  twenty-five  individual  monarchies 
and  republics  of  the  empire.  The  Bundesrat 
from  time  to  time  calls  a  "general  conference" 
for  regulating  railway  rates.  The  railways  have 
voting  powers  in  the  conference  according  to 
mileage  as  follows:  up  to  50  kilometres  (31  miles) 
one  vote;  above  50  and  up  to  150  kilometres 
(93.2  miles)  two  votes;  from  150  kilometres  to 
300  (186.4  miles)  three  votes;  beyond  300  and  up 
to  500  kilometres  (310.7  miles)  four  votes,  and 
for  each  additional  200  kilometres  (124.3  miles) 
one  vote  more.  Business  for  the  general  confer- 
ence is  prepared  by  a  permanent  rate  commis- 


20         MONARCHICAL  SOCIALISM 

sion  with  representatives  from  fourteen  railway 
boards.  A  subdivision  of  membership  called  the 
Trader's  Committee  is  made  up  of  five  repre- 
sentatives of  agriculture  elected  by  the  combined 
agricultural  chambers  of  the  empire,  five  repre- 
senting the  manufacturing  interests,  and  five  the 
distributing  commercial  interests.  '  The  two  lat- 
ter classes  are  elected  by  the  chambers  of  com- 
merce of  the  country  acting  together.  These  fif- 
teen and  a  member  appointed  by  the  Bavarian 
Government  recommend  to  the  permanent  com- 
mission authoritatively,  especially  in  adjusting 
rates  equitably  among  zones  of  traffic  into  which 
the  empire  is  apportioned,  so  that  a  shipper  in 
one  part  of  the  country  shall  not  be  at  a  disad- 
vantage in  internal  trade  through  his  geographi- 
cal location. 

The  railway  direction  is  informed  upon  lo- 
cal conditions  through  district  advisory  boards. 
Members  of  the  boards  are  elected  or  appointed 
in  various  ways,  according  to  which  state  or  pri- 
vate road  is  concerned.  The  principle  of  choice 
is  that  the  district  board  shall  be  representative 
of  the  agriculture,  the  forestry,  the  manufact- 
ures, the  mines,  and  the  trade  of  the  division. 
Prussia,  which  dominates  the  imperial  railway 
plexus,  draws  district  advisers  through  election 


GERMAN  RAILWAY  POLICY       21 

for  three-year  terms  by  chambers  of  commerce, 
merchants'  associations,  agricultural  provincial 
unions,  and  other  bodies  designated  by  the  min- 
ister of  public  works.  The  shipper  dissatisfied 
with  a  rate  starts  his  complaint  with  the  local 
board.  He  may  of  course  appeal  from  the  judg- 
ment of  the  board. 

The  Bundesrat  in  railway  matters  acts  under 
general  instructions  agreed  upon  by  the  feder- 
ated governments  as  follows: 

1.  The  advancement  of  the  internal  indus- 
trial and  agricultural  production  by  cheapening 
the  cost  of  raw  materials  or  equipment  for  pro- 
duction. 

2.  To  facilitate  the  export  of  German  prod- 
ucts. 

3.  To  support  the  trade  of  German  commer- 
cial centres. 

4.  To  favor  German  railway  lines  against 
competing  foreign  waterways  and  railways. 

The  central  government  began  its  supervision 
of  railway  rates,  whether  state-owned  or  private, 
under  clauses  in  the  imperial  constitution  of 
1871.  Article  4  places  the  railways  "subject  to 
surveillance  of  the  empire  and  to  imperial  leg- 
islation," while  article  8  creates  the  permanent 
committee  of  the  Bundesrat  or  Federal  Council 


22        MONARCHICAL  SOCIALISM 

and  article  42  provides  "that  in  the  interests  of 
general  commerce  the  federal  governments  un- 
dertake to  administer  the  German  railways  as  a 
uniform  system. ' '  Article  45  gives  the  empire  con- 
trol over  rates  and  requires  that  uniform  charges 
shall  be  introduced  as  soon  as  possible,  agriculture 
and  industry  to  have  special  privileges.  In  the 
development  of  the  German  railway  system  the 
clause  of  the  constitution  respecting  special  priv- 
ileges has  been  utilized  to  fix  exceptional  rates, 
based  on  political  and  national  considerations, 
upon  more  than  half  of  all  the  freight  carried. 
The  railway  board  has  established  twenty-seven 
classes  of  exceptional  tariffs  for  internal  trade 
and  thirty-one  classes  of  exceptional  rates  for 
seaport  traffic.  When  the  railway  board  was 
created  by  the  imperial  parliament  in  1873  there 
were  ninety  railway  administrations  in  Germany, 
with  1,357  different  rate-tables.  This  was  in  the 
days  when  the  railways  of  Germany  were  largely 
in  private  company  control.  Bismarck,  speak- 
ing April  26,  1876,  on  a  different  phase  of  the 
subject,  said:  "Nowadays  we  see  that  railway 
administrations,  without  benefit  to  the  railways 
and  the  shareholders,  and  as  it  were  as  a  kind  of 
sport,  wage  with  each  other  wars  which  cost 
much  money,  and  which  are  wars  of  power  more 


GERMAN  RAILWAY  POLICY       23 


than  anything  else,  without  financial  competi- 
tion." 

The  exceptional  tariffs  for  goods  going  abroad 
are  designed  on  the  general  principle  of  giving 
as  low  a  proportionate  rate  to  parcels  as  is  given 
to  carload  lots  destined  for  internal  use.  The 
wholesale  glass-dealer  in  Berlin  shipping  to  Ham- 
burg must  pay  at  the  rate  of  ten  marks  a  metric 
hundredweight  on  shipments  of  glassware  in  less 
than  carload  lots.  If,  however,  his  shipment  of 
less  than  a  carload  is  for  export,  he  pays  only 
three  marks  a  metric  hundredweight.  The  sub- 
joined are  some  of  the  rates  on  goods  for  export 
contrasted  with  internal  rates,  in  ten-ton  lots 
per  metric  ton  (2,204.6  pounds) : 


SHIPPING-POINTS 

MILES 

GOODS 

EXPORT 
BATE 

NORMAL 
BATE 

Cologne  to  Hamburg.  . 

267 

Copper  wares  

$3.14 

$6.38 

267 

Lead  in  blocks  

3.17 

4.86 

if                 « 

267 

Cotton  goods  

3.64 

6.38 

«                 « 

267 

Machinery  and  machine 
parts  

2.53 

4.86 

«                 « 

267 

Iron  plates  and  locomo- 
tives   

1.33 

3.83 

Frankfort  to     " 

330.6 

Machinery    and       iron 
wares  

3.07 

6.00 

Bremen.  .  . 

285.2 

Machinery     and     iron 
wares  

2.69 

5.21 

Liibeck.  .  . 

385 

Machinery     and     iron 
wares  

1.67 

4.71 

Niirnberg  to  Hamburg 

394.6 

Thuringian  wares,  toys  . 

5.83 

9.33 

24         MONARCHICAL  SOCIALISM 

Exceptional  rates,  such  as  those  in  the  fore- 
going table,  are  constructed  upon  three  princi- 
ples :  that  the  goods  are  intended  for  export  and 
must,  therefore,  be  carried  at  a  lower  rate  than 
goods  for  internal  use;  that  the  rate  to  such  a 
port  as  Liibeck,  whose  steam-ship  lines,  running 
to  certain  limited  territories,  ought  to  have  a 
preferential  rate  over  the  great  ports  of  Ham- 
burg and  Bremen;  and,  finally,  that  the  rates  on 
particular  lines  of  goods  are  adapted  to  condi- 
tions abroad  that  influence  the  export  trade. 
For  example,  in  bad  trade  years  the  rates  are 
lowered  far  below  the  usual  exceptional  rate. 
Sometimes  the  exceptional  rate  is  cut  a  third,  or 
even  a  half;  and  this  is  also  done  on  internal 
shipments  when  extraordinary  conditions  pre- 
vail, such  as  a  failure  of  the  hay  crop. 

The  national  railway  supervision  also  makes 
exceptional  tariffs  on  shipments  from  other  coun- 
tries passing  through  Germany,  as  for  instance 
on  the  grain  traffic  from  Russia  to  oversea  coun- 
tries. A  special  grain  rate  is  made  from  Hun- 
gary to  England  by  way  of  Hamburg  in  order  to 
draw  freight  to  Hamburg  in  competition  with 
Belgian,  Dutch,  French,  and  Adriatic  ports. 
These  rates  on  goods  of  foreign  origin  are  often 
made  regardless  of  distance,  and  are  designed  to 


GERMAN  RAILWAY  POLICY       25 

secure  the  traffic  for  German  railways  and  steam- 
ship lines.  The  fundamental  idea  is  the  use  of 
transportation  facilities  as  a  basis  for  national 
industrial  and  commercial  advantage.  The  im- 
perial railway  direction  also  grants  extensive  re- 
bates to  the  large  shippers.  Thus,  when  coal  is 
shipped  it  may  have  several  exceptional  rates, 
depending  upon  the  amount  shipped.  The  ship- 
per pays  at  the  time  of  shipment  the  ordinary 
exceptional  rate,  and  at  the  end  of  the  year  a  re- 
bate is  paid  him,  according  to  whether  the  total 
of  his  shipments  for  the  previous  year  falls  into 
one  or  another  of  the  special  exceptional  rates 
granted  to  the  great  shippers. 

The  railway  management  grants  individual 
exceptional  rates.  For  instance,  a  man  of  en- 
terprise in  a  village,  having  found  that  the  sand 
near  by  is  adapted  to  the  making  of  a  certain 
kind  of  glass,  decides  to  start  a  factory,  provided 
he  can  have  the  combining  chemicals  and  coal 
brought  to  him  at  a  price  low  enough  to  make 
his  idea  a  profitable  one.  He  applies  first  to  the 
chamber  of  commerce  within  whose  jurisdiction 
his  locality  is.  It  is  the  duty  of  the  chamber  of 
commerce,  which  in  Germany  is  a  semi-official 
body  with  a  compulsory  contributing  member- 
ship, to  investigate  the  value  of  the  idea  techni- 


26        MONARCHICAL  SOCIALISM 

cally.  Should  the  project  appear  commercially 
sound,  the  governing  body  of  the  chamber  will 
support  an  application  for  an  individual  rate  on 
the  materials  required.  A  fresh  examination  is 
made  by  the  railway  authorities,  and,  if  the  con- 
clusions of  the  chamber  of  commerce  are  verified, 
the  extraordinary  rate  is  granted. 

Sixty-six  per  cent  of  all  the  freight  carried  on 
German  railways  is  now  taken  under  exceptional 
rates.  The  privileged  traffic  has  increased  from 
45.6  per  cent  in  1895  to  66  per  cent  in  1911. 

The  national  railway  supervision  has  pre- 
pared tariff  rate-books  for  combined  rail  and 
sea  routes  arranged  so  simply  that  even  the 
layman  can  understand  them.  A  merchant  at 
Burgas,  Smyrna,  or  Galatz,  in  the  Levant  asks  of 
an  American  maker  in  Grand  Rapids  and  of  a 
German  manufacturer  in  Coburg  a  price  on  one 
hundred  refrigerators,  inclusive  of  freight  and 
all  other  charges,  delivered  at  his  port.  The 
Grand  Rapids  firm,  if  it  has  never  before  shipped 
to  Smyrna,  Burgas,  or  Galatz,  must  make  wide 
inquiries  taking  much  time  and  trouble  before 
being  able  to  determine  approximately  what 
the  transportation,  terminal,  and  forwarding 
charges  by  rail  and  steamer  will  be,  and  he  will 
probably  not  be  able  to  learn  exactly  what  the 


GERMAN  RAILWAY  POLICY       27 

charges  of  forwarding  will  be.  After  delays  that 
may  prevent  his  getting  the  order,  he  is  obliged 
to  name  a  price  that  will  cover  the  possible  dif- 
ference between  the  compilation  of  freights  and 
forwarding  charges  and  what  they  may  actually 
be  upon  foreign  shipping  lines.  The  Coburg 
manufacturer,  by  referring  to  the  Levant  rate- 
book under  Coburg,  sees  that  refrigerators  are 
listed  in  the  eleventh  classification,  and  that  the 
rate,  including  land  and  water,  is  at  the  rate  of 
marks  6.74  per  100  kilos  for  shipments  under 
5,000  kilos,  marks  6.59  if  beyond  5,000  kilos,  and 
marks  6.42  if  amounting  to  more  than  10,000 
kilos. 

The  railway  administration  undertakes  also 
to  be  responsible,  in  connection  with  steam-ship 
companies,  for  the  delivery  of  the  shipment,  so 
that  the  shipper,  when  he  has  paid  the  freight 
charges,  need  give  himself  no  further  concern. 
The  railway  management  obtains  for  him  a  bill 
of  lading  when  the  goods  are  placed  aboard  a 
steamer  at  Hamburg  or  Bremen,  upon  which  the 
shipper  may  obtain  his  money  at  a  bank,  or,  if 
he  prefers,  will  forward  the  bill  to  the  consignee. 
The  essential  facts  in  the  transaction  are  that  the 
shipper  has  worked  out  for  him  in  advance  the 
exact  cost  of  transportation  and  delivery,  and 


28         MONARCHICAL  SOCIALISM 

that  he  is  able  to  have  the  government  look  after 
the  delivery  of  the  goods  with  no  further  bother 
to  himself  than  if  he  were  mailing  a  letter  with 
the  proper  postage  prepaid.  Thus  export  is 
enormously  facilitated,  especially  for  small  con- 
cerns. 

Such  rate-books  as  that  described  for  the  Le- 
vant have  been  worked  out  by  the  railway  super- 
vision for  the  whole  world,  although  they  are  not 
published  for  distribution  except  for  the  Levant 
and  South  Africa.  It  appears  to  be  considered 
more  judicious  from  the  stand-point  of  the  ex- 
porter not  to  publish  rates  for  every  part  of 
the  world  for  general  distribution.  The  exporter 
can  learn  the  rate  to  any  port  or  railway  station 
outside  of  Germany  by  inquiring  at  his  local  rail- 
way station.  Such  inquiries  regarding  American 
cities  reveal,  I  am  told,  that  some  rates  are  made 
from  interior  points  in  Germany  to  cities  west 
of  the  Mississippi  River  lower  than  the  rates  on 
the  same  goods  from  the  Atlantic  seaboard  to 
the  same  cities  west  of  the  Mississippi. 

It  has  seemed  to  me  possible  that  railways  in 
the  United  States  might  co-operate  under  na- 
tional supervision  as  effectively  as  the  German 
railways,  although  conditions  in  the  United 
States  are  extremely  different  from  those  in  Ger- 


GERMAN  RAILWAY  POLICY       29 

many,  in  that  91  per  cent  of  the  mileage  in  Ger- 
many is  owned  by  the  German  states  and  only 
9  per  cent  by  private  companies.  Private  com- 
panies are  dependencies  of  the  state-owned  rail- 
ways, because  the  state  may  take  over  the  pri- 
vate lines  whenever  it  may  wish  to  do  so,  at  a 
fair  valuation  based  upon  the  dividends  of  the 
previous  ten  years.  In  case  a  road  has  not  been 
in  operation  as  long  as  ten  years,  the  dividends 
for  three  years  may  be  taken  as  the  basis 
of  valuation.  The  imperial  constitution  estab- 
lishes national  supervision  under  the  clauses  that 
have  been  mentioned.  Yet,  under  the  recent 
legislation  of  Congress  a  more  definite  correla- 
tion of  the  railway  interests  of  the  United  States 
has  been  begun  than  the  Interstate  Commerce 
Commission  was  able  previously  to  undertake. 

The  private  lines  in  Germany  have  been 
treated  liberally  enough  to  allow  them  to  declare 
dividends  that  have  been  steadily  increasing 
with  the  development  of  the  country.  The  divi- 
dends of  thirteen  of  the  more  important  private 
lines  run  from  6  to  9  per  cent.  For  instance,  the 
private  "  Lubeck-Buchener  and  Lubeck-Ham- 
burger  Railway,"  with  a  capital  of  25,000,000 
marks  and  bonds  for  19,650,000  marks,  has  paid 
during  the  last  three  years  8  per  cent,  the  high- 


30         MONARCHICAL  SOCIALISM 

est  dividends  paid  since  the  opening  of  the  line  in 
1852.  The  dividends  began  at  2  per  cent  and, 
with  slight  fluctuations,  have  risen  during  fifty- 
eight  years  to  the  present  8  per  cent.  The  pros- 
perity began  in  the  early  seventies,  when  the 
dividend  rose  to  5j  per  cent,  and  it  has  never 
fallen  below  that  figure  since.  The  Liibeck- 
Biichener  and  Lubeck-Hamburger  Railway  is  not 
selected  from  the  thirteen  for  its  prosperity,  but 
is  taken  as  a  representative  company.  The  Prus- 
sian state  railways,  which  dominate  the  German 
system,  pay  8  per  cent  on  an  actual  cash  invest- 
ment of  9,000,000,000  marks.  The  railways  are 
carried  on  the  books  of  the  Prussian  government 
at  about  18,000,000,000  marks,  since  4  per  cent 
is  regarded  as  a  reasonable  dividend  basis.  The 
German  experience,  therefore,  has  been  that 
both  the  state  and  the  privately  owned  railways 
make  an  excellent  return  on  the  capital  invested. 
The  returns  have  been  large,  notwithstanding 
the  use — one  might  say  the  manipulation — of 
the  railways  to  meet  the  exigencies  of  the  export 
trade,  the  competition  of  foreign  railways  and 
ports,  and  the  peculiarities  of  local  internal  con- 
ditions. 

German  railways,  state  and  privately  owned 
yet  under  national  supervision,  give  discriminat- 


GERMAN  RAILWAY  POLICY       31 

ing  rates,  grant  rebates,  treat  localities  and  indi- 
viduals exceptionally,  charge  all  the  traffic  will 
bear  under  one  set  of  conditions  and  extraordi- 
narily low  rates  for  other  circumstances,  em- 
ploying all  the  devices  condemned  and  passion- 
ately opposed  in  America,  and  exercise  all  the 
powers  of  absolute  monopoly.  There  is,  how- 
ever, this  basic  difference :  that  while  in  America 
these  devices  are  suggested,  even  necessitated, 
by  the  war  of  interests  or  the  wills  and  judg- 
ments of  individual  managers,  they  are  applied 
in  Germany  according  to  principles  of  equity 
which  take  into  account  industry,  trade,  and 
agriculture  as  a  national  whole,  granting  excep- 
tions, taking  one  sort  of  traffic  as  privileged,  an- 
other as  normal,  upon  calculations  wide  enough 
to  include  the  interests  of  the  whole  people.  So 
far  as  perceived,  shippers,  whether  falling  into 
one  category  or  another,  feel  no  sense  of  unfair 
treatment.  They  know  that  the  system  is  in- 
tended to  be  just  and  nationally  effective,  that 
whatever  rate  is  made  is  a  result  of  reasoning 
together  by  those  who  made  it  and  those  who 
use  it,  and  that  the  rate  can  be  changed  pro- 
vided inequity  can  be  shown  or  that  a  lower  rate 
would  be  of  advantage  to  the  national  organ- 
ism. There  are  no  secret  rates. 


32         MONARCHICAL  SOCIALISM 

Notwithstanding  the  immense  differences  be- 
tween American  and  German  railroads  in  owner- 
ship and  in  variety  of  conditions,  it  may  be  that 
partly  by  legislation  and  partly  by  the  co-opera- 
tion of  some  of  the  powerful  railroad  managers 
in  the  United  States  a  close  national  control 
might  be  developed  from  the  foundations  already 
laid.  Political  considerations  and  the  perma- 
nent well-being  of  the  wealth  massed  in  railways 
might  co-operate  in  building  a  system  of  control, 
subordinating  railways,  to  their  ultimate  ad- 
vantage as  dividend-payers,  to  industrial,  com- 
mercial, and  farming  interests  as  an  entirety. 
The  railway  captains  would  lose  something  of 
the  joyousness  of  free-lance  independence,  but 
they  would  be  more  solidly  effective  as  corps 
commanders  in  a  co-ordinated  army.  They 
might  also  draw  larger  allotments  of  revenue  for 
their  shareholders  as  a  result  of  saving  the  waste 
of  working  alone  and  by  concentrating  attention 
upon  service  to  economic  unity  rather  than  to 
economic  war. 


Ill 

THE  PASSING  OF  THE  UNSKILLED 

THE  industrial  spirit  of  the  German  people 
seeks  to  prepare  the  growing  generation 
for  achievements  in  production  as  im- 
posing in  contrast  with  the  present  as  the  work 
of  to-day  compares  with  that  of  the  eighties. 
Faith  in  work,  the  resultant  of  things  done, 
drives  forward  in  a  many-sided  preparation  for 
greater  things  to  be  done.  The  German,  with  a 
past  of  extraordinary  hardship  and  suffering,  in  a 
land  poor  rather  than  rich  in  natural  resources, 
has  by  thought  and  contrivance,  by  sea  trans- 
port and  exchange,  availed  himself  of  the  re- 
sources of  other  peoples.  Compulsory  sanitary 
living  and  other  legislation  requiring  a  minimum 
of  social  well-being  have  lengthened  the  average 
life  and  increased  the  height  and  bodily  frame 
of  both  sexes.  The  German  mind  has  now  a 
stronger  physical  instrument  with  which  to  work 
than  the  generation  that  fought  with  France. 
The  training  of  that  instrument  is  expressed  in- 
tensely in  relation  to  skilled  production  by  the 
work  of  the  continuation  and  trade-schools. 

33 


34         MONARCHICAL  SOCIALISM 

The  explanation  the  German  generally  gives 
of  the  sudden  and  immense  industrial  expansion 
beginning  in  the  seventies  is  the  compulsory  ele- 
mentary education  of  the  whole  people.  The 
Germans  were  ahead  of  any  European  people  in 
primary  mental  training  and  possessed,  there- 
fore, material  more  easily  converted  into  ma- 
chine builders  or  metal  workers  or  electrical- 
instrument  makers  than  the  untaught  laborer. 
The  German  workmen,  not  so  capable  probably 
as  those  of  the  United  States  or  of  the  United 
Kingdom,  achieve  (through  training  and  through 
obedience  to  authority,  also  trained  finely  in  the 
higher  reaches  of  scientific  technic)  results  that 
seem  individually  beyond  their  strength.  The 
observer  from  abroad  sees  the  military  system 
reproduced  in  the  factory.  It  is  rather  that  the 
character  of  the  German  is  disclosed  with  equal 
clearness  in  mine  and  factory  management,  the 
military  system,  the  civil  administration,  and  by 
the  organization  of  labor  upon  landed  estates. 
The  disciplined  life  at  home,  in  the  school,  in 
the  workshop,  in  the  army,  and  again  at  work, 
are  all  designs  in  the  same  weave.  The  same 
threads  run  through  all  patterns.  How  these 
character  threads  were  spun  in  the  hard  centu- 
ries of  struggle  and  persistence  and  are  now  be- 


THE  PASSING  OF  THE  UNSKILLED    35 

ginning  to  show  in  strangely  interesting  design, 
is  a  high  study.  The  endeavor  of  this  essay 
is  only  to  indicate  one  of  the  figures  running 
through  the  loom  —  the  making  of  the  labor  unit 
more  efficient  by  special  training  in  his  youth. 

The  son  of  a  day-laborer,  who,  within  the 
view  of  the  national  policy,  should  be  more  use- 
ful to  himself  and  the  commonwealth  than  his 
father,  is  the  subject  of  careful  expert  observa- 
tion. His  teachers,  the  school  physician,  and 
the  parents  endeavor  to  determine  the  handi- 
craft to  which  the  boy  is  adapted.  The  physi- 
cian takes  note  of  the  body.  The  strong  boy  of 
average  build  is  classified  as  suited  to  become 
a  brewer,  a  smith,  a  carpenter,  a  mason,  or  a 
worker  in  iron  construction,  or  some  other  call- 
ing requiring  at  least  average  strength.  The 
undersized  or  weaker  boy  is  considered  as  being 
better  adapted  to  become  a  tailor,  a  bookbinder, 
a  basket-maker,  a  wood-carver,  a  locksmith,  a 
jeweller,  a  glazier,  a  joiner,  a  cabinet-maker,  a 
potter,  a  brush-maker,  or  a  confectioner.  The 
boy  with  weak  lungs  is  excluded  from  trades 
where  there  is  a  good  deal  of  dust,  such  as  that  of 
the  wood-turner  or  the  paper-hanger.  The  boy 
with  pulmonary  weakness  would  also  not  be  al- 
lowed to  become  a  shoemaker  or  a  tailor,  because 


36         MONARCHICAL  SOCIALISM 

of  the  bent  attitudes  in  which  he  would  have  to 
work.  Should  the  boy  have  a  weak  heart,  he 
would  be  classified  as  unfit  for  the  heavy  work  of 
the  smith,  the  butcher,  the  miller,  or  any  of  the 
building  trades.  The  youth  who  has  chroni- 
cally perspiring  hands  is  deemed  incapacitated  for 
gold-work,  clock-making,  bookbinding,  or  lith- 
ographing. The  boy  with  inflamed  eyelids  is  as 
fully  excluded  from  work  in  colors  as  though  he 
were  color-blind.  Within  the  view  of  the  school 
medical  counsellor,  the  boy  must  be  saved  from 
entering  upon  a  trade  in  which  he  will  always  be 
at  a  disadvantage  physically,  and  his  whole  life 
be  a  struggle  on  unequal  terms  with  those  better 
qualified  to  deal  with  the  peculiar  conditions  of 
that  trade. 

The  teachers  undertake  to  measure  the  mental 
capacities  of  the  boy.  If  he  is  generally  a  dull 
pupil,  he  will  be  indexed  as  being  better  adapted 
to  a  trade  not  far  removed  from  unskilled  labor. 
The  bright  pupil,  especially  if  he  should  show 
manual  delicacy  in  the  systematic  tests  to  which 
he  is  subjected  toward  the  end  of  his  school 
period,  would  have  a  choice  of  some  fine  handi- 
craft, such  as  that  of  instrument-making,  en- 
graving, or  jewel-setting. 

Painstaking  effort  is  made  to  determine  the 


THE  PASSING  OF  THE  UNSKILLED    37 

boy's  inclinations,  so  that  the  great  misfortune 
may  not  happen  to  him  of  being  deprived  of  the 
joy  of  work,  of  satisfaction  in  the  thing  done. 
Within  the  view  of  the  Prussian  school  admin- 
istration, and  this  is  equally  true  of  Bavaria 
and  most  of  the  other  German  states,  the  skilled 
worker  ought  to  find  in  his  calling  one  of  the 
great  satisfactions  of  life — a  certain  artistic 
pride,  the  disposition  to  do  his  work,  not  alone  as 
he  has  been  taught,  but  to  add  to  it  something 
of  his  own  individuality,  because  he  loves  the 
work  and  puts  something  of  his  spiritual  self 
into  it.  No  boy  is  compelled  or  unduly  forced 
into  the  choice  of  a  calling.  He  is  handled 
temperamentally  and  sympathetically.  The  en- 
deavor is  made  to  stir  the  boy's  ambition.  Mas- 
ters and  parents  confer.  The  parents  working 
at  common  labor  almost  always  want  their  chil- 
dren to  do  better  in  life  than  they  have  done. 
They  readily  co-operate  in  getting  the  convic- 
tion fixed  in  the  boy's  mind  that  he  ought  not  to 
be  an  unskilled  workman,  that  when  he  finishes 
his  school  work  he  ought  not  to  be  content  to 
be  among  those  at  the  bottom  of  society  doing 
the  coarse  labor  of  the  ditch,  but  that  he  ought 
to  choose  a  trade  and  fit  himself  for  one  of  the 
higher  levels  where  intelligence  counts  for  some- 


38        MONARCHICAL  SOCIALISM 

thing  and  where  wages  and  opportunities  are 
larger.  The  germ  of  the  whole  system  of  manual 
training  is  considered  by  the  Prussian  Ministry 
of  Commerce  and  Industry  to  be  in  the  awak- 
ening of  the  boy's  aspirations  fora  life  above 
the  ordinary.  This  awakening  is  much  more  of 
a  problem  for  the  children  of  the  unskilled  or 
the  nearly  unskilled  classes  than  for  those  of  the 
higher  artisan  class.  The  surroundings  and  the 
tone  in  the  home  life  of  a  superior  workman 
usually  settle  the  inclination  of  the  boy  to  be  at 
least  equal  to  his  father. 

The  Munich  administration  has  added  an 
eighth  year  to  the  usual  seven  of  compulsory 
primary  education,  which  is  given  almost  en- 
tirely to  drawing,  card-board,  and  wood-work 
training.  The  school  authorities  have  two  ob- 
jects in  view.  One  is  to  start  the  boy  in  the 
direction  of  a  particular  trade,  his  studies  to 
be  completed  in  compulsory  continuation  trade- 
schools.  The  second  object  is  to  give  the  boy 
who  has  not  selected  a  trade  a  distaste  for  un- 
skilled work,  so  that  he  may  later  feel  impelled 
to  choose  a  skilled  occupation.  This  policy  has 
been  worked  out  by  Doctor  Kerschensteiner, 
whose  name  is  international  and  whose  ideas 
are  well  known  in  the  United  States.  Of  2,200 


THE  PASSING  OF  THE  UNSKILLED    39 

boys  who  left  the  highest  class  of  the  element- 
ary schools  in  Munich  in  an  average  year,  2,150 
went  into  handwork  or  other  skilled  occupation 
at  once.  Thus  2  per  cent  only  were  lost  to 
skilled  industry.  Not  one  boy  from  the  school 
is  known  to  have  allowed  himself  to  fall  into  that 
ugly  classification,  "the  unemployable." 

The  teacher  tries  to  impress  on  the  youthful 
mind  the  worth  of  labor,  how  labor  will  win  all 
things,  that  pleasure  in  making,  producing,  cre- 
ating may  be  one  of  the  truest  joys  of  life,  that 
in  it  may  be  found  for  most  persons  the  service 
of  Heaven,  the  country,  the  community,  and 
one's  self.  The  elementary  reading-books  in- 
clude a  variety  of  such  stories  as  this  one,  entitled 
"The  Gentleman  in  England."  "When  the 
celebrated  philosopher  and  printer,  Benjamin 
Franklin,  came  to  Europe  he  had  with  him  a 
negro  servant.  Franklin,  as  is  well  known,  was 
very  inquisitive  and  travelled  through  the  whole 
of  England  in  order  to  see  factories  and  other 
objects  of  interest.  His  servant  went  with  him 
and  also  saw  everything.  They  finally  returned 
to  London.  The  following  day  Franklin  said  to 
the  negro:  'Now  that  you  have  seen  all  of  Eng- 
land, how  does  it  please  you?'  The  negro  shook 
his  head  and  said:  'England  is  a  very  strange 


40         MONARCHICAL  SOCIALISM 

country ;  everybody  works  here.  The  water  and 
the  smoke  work,  the  horses,  the  oxen,  and  even 
the  dogs  work.  The  men,  the  women,  and  the 
children  work.  Everybody  works  except  the 
pigs.  The  pig  does  not  work;  he  does  nothing 
but  eat  and  drink  and  sleep.  The  pig  alone  is 
gentleman  in  England.' ' 

It  has  long  been  a  house  law  of  the  Hohen- 
zollerns  that  each  should  learn  a  handicraft. 
The  prince,  it  is  considered,  is  only  in  this  way 
able  to  understand  the  qualities  in  a  subject  that 
make  him  a  good  artisan.  The  prince  also  gains 
that  feeling  of  confidence  in  his  own  powers  that 
comes  from  skilled  handwork.  The  Emperor  is 
a  bookbinder.  Among  the  Emperor's  fine  col- 
lection of  bindings  are  specimens  of  American 
work,  chiefly  from  Philadelphia.  He  probably 
appreciates  no  product  of  American  industrial 
art  so  highly  as  that  of  the  bookbinder.  The 
Crown  Prince  is  a  turner,  another  of  the  Em- 
peror's sons  is  a  blacksmith,  the  third  a  brass- 
worker.  The  teacher  who  seeks  an  illustration 
for  competence  in  any  trade  can  usually  find  a 
royal  example,  either  present  or  past.  The  Em- 
press and  her  daughter  Viktoria  are  excellent 
sewing  women,  and  have  gone  through  courses 
in  cooking.  It  is  a  pleasantry  in  the  diplomatic 


THE  PASSING  OF  THE  UNSKILLED    41 

corps  that  to  interest  the  Empress  one  must  have 
something  new  to  say  about  household  manage- 
ment, the  children,  or  the  church.  The  psycho- 
logical part  of  the  method  is  to  make  the  boy 
believe  really  that  virtue,  happiness,  and  the  re- 
wards of  life  are  derived  from  work,  that  neither 
a  prince,  a  member  of  the  cabinet,  an  officer,  nor 
a  millionaire  can  escape  work,  or  indeed  that 
he  wishes  to  avoid  it.  All  this  seems  very  much 
like  Sunday-school  instruction  and  parental  plat- 
itudes. That  is  true.  It  has  been  noted  by  an 
economic  writer  in  The  London  Times,  after  a 
study  of  Germany,  that  the  German  is  brought 
up  on  just  the  kind  of  moral  nourishment  that 
was  made  common  in  England  thirty  or  forty 
years  ago  by  Carlyle,  Ruskin,  and  Kingsley. 
The  commonplaces  appear  to  be  driving  power, 
to  put  moral  energy  into  the  ordinary  task. 
In  a  trade-school  shop,  where  forty  or  fifty  boys 
are  at  work,  intent  and  earnest,  one  seems  to  feel 
the  spirit  of  Germany  of  to-day  —  duty,  work, 
skill. 

The  continuation  trade  and  commercial  schools 
are  not  cubes  in  a  rigid,  finished  structure.  They 
are  germinating,  flourishing,  growing  in  immense 
variety  out  of  local  conditions,  moulded  by  local 
individualism.  Some  schools  are  owned  by  the 


42         MONARCHICAL  SOCIALISM 

states,  some  by  guilds,  municipalities,  trades- 
unions,  manufacturers'  associations,  and  by  pri- 
vate societies  and  persons.  The  school  or  group 
of  schools  in  any  industrial  district  has  been 
founded  ordinarily  to  train  workmen  for  the  spe- 
cialties produced  there.  The  pupil  is  usually  a 
beginner  in  one  of  the  factories,  and  he  is  dealing 
in  the  school  with  the  difficulties  and  problems 
that  arise  day  by  day  in  the  factory.  The  in- 
struction is  of  the  best.  The  master-workmen, 
up-to-date  and  capable  men  of  the  neighboring 
works,  serve  in  the  school-room.  The  equip- 
ment, the  tools,  the  machinery,  are  usually  of 
the  latest  design,  so  the  youth  feels  that  he  is 
getting  the  best  that  can  be  learned.  The  trade- 
school  is  in  such  close  working  co-operation  with 
the  adjacent  manufacturers  that,  besides  bor- 
rowing some  of  the  best  workmen  for  short  peri- 
ods for  instructors,  the  advice  of  the  manufact- 
urers is  sought  or  voluntarily  given. 

The  learner,  if  the  school  is  compulsory,  may 
be  punished  by  public  reprimand,  a  two  hours' 
confinement,  or  by  expulsion.  Expulsion  is  in- 
frequent because  the  school  opinion  is  so  strong 
that  any  boy  does  not  like  to  put  himself  outside 
of  his  fellows'  good-will.  Besides,  the  youth  feels 
that  his  whole  future  is  involved  and  that  he 


THE  PASSING  OF  THE  UNSKILLED    43 

must  endure  and  persevere.  An  essential  fact 
of  the  primary  technical  continuation  school  in 
Germany  is  that,  under  an  imperial  law  of  June  1, 
1891,  as  corrected  by  the  so-called  industrial  law 
of  June  30,  1900,  employers  are  required  "to 
grant  to  those  of  their  employees  under  eighteen 
years  of  age,  including  female  clerks  and  female 
apprentices  who  attend  a  continuation  school  ar- 
ranged by  the  government  or  a  local  authority, 
the  necessary  time  for  school  attendance  as  pre- 
scribed by  the  authority  in  question."  Any  one 
contravening  these  regulations  is  subject  to  a 
fine  of  twenty  marks  for  every  offence  and,  if 
this  is  not  paid,  to  three  days'  imprisonment. 
The  compulsory  system  has  been  in  operation  in 
Berlin  six  years;  and  in  the  beginning  the  admin- 
istration had  difficulty  with  business  houses  re- 
garding the  times  of  attendance,  rather  than 
with  the  principle.  The  trades-unions  and  So- 
cial Democrats  were  energetic  for  compulsion. 
Penalties  have  been  resorted  to  reluctantly,  a 
representative  of  the  school  management  usually 
having  been  able  to  win  voluntary  compliance 
by  pointing  out  the  clear  conditions  of  the  law 
and  the  advantages  to  the  young  persons  con- 
cerned. A  good  many  instances  of  resistance 
were  fined  in  the  second  year.  Now  that  the 


44         MONARCHICAL  SOCIALISM 

employers  and  parents  understand  that  resist- 
ance is  useless,  there  are  few  refusals  to  give 
the  necessary  time.  Some  employers  are  of  the 
opinion  that  compulsory  continuation  schools 
tend  to  raise  wages  and  to  make  employees  un- 
willing to  do  menial  work  and  the  automatic 
machine  operations  of  subprocesses  in  produc- 
tion. Yet  four-fifths,  or  even  a  higher  percent- 
age, of  opinions  which  have  been  gathered  by 
the  Prussian  Ministry  of  Commerce  at  first- 
hand from  employers  in  all  branches  of  produc- 
tion indicate  good-will  toward  the  schools. 

Prussia,  which  is  five-eighths  of  the  empire, 
has  roundly  3,000,000  persons  from  fourteen  to 
eighteen  years  old.  Of  this  number  1,473,000 
are  youths,  1,527,000  are  girls.  Two-thirds  of 
the  whole,  or  about  2,000,000,  are  working  — 
1,250,000  boys  and  750,000  girls.  Agriculture 
takes  813,000,  about  equally  divided  between 
the  sexes.  Industry  employs  650,000  boys  and 
191,000  girls;  70  per  cent  of  the  boys  have  been 
trained  in  some  variety  of  continuation  school, 
and  48  per  cent  of  the  girls.  In  trade  and  trans- 
portation 114,000  were  employed  last  year,  and 
of  that  number  56  per  cent  had  gone  to  some  sort 
of  commercial  school;  of  the  67,000  girls  within 
the  ages  of  fourteen  to  eighteen  in  trade  and 


THE  PASSING  OF  THE  UNSKILLED    45 

transportation,  52  per  cent  had  been  instructed 
in  commercial  schools.  In  Berlin  89  per  cent  of 
the  workers  between  the  ages  of  fourteen  and 
eighteen  are  taking  continuation  courses,  55  per 
cent  in  Hesse-Nassau,  48  per  cent  in  Hanover, 
50  per  cent  in  the  province  of  Posen,  70  per  cent 
in  the  province  of  West  Prussia.  Under  a  Prus- 
sian law  giving  subsidies  to  municipal  trade- 
schools,  provided  they  are  compulsory,  the  num- 
ber of  pupils  increased  during  the  six  years 
preceding  1910  by  55  per  cent.  The  continua- 
tion trade-school  administration  works  with  the 
official  labor  exchanges  of  the  empire  in  the  en- 
deavor to  direct  the  choosing  of  trades  into  those 
callings  where  the  greatest  opportunities  exist 
for  employment.  The  central  labor  bureau  for 
Prussia  draws  up  a  sheet  at  the  end  of  each 
month  which  shows  exactly  the  number  out  of 
employment  in  all  trades.  Taken  over  a  period 
of  years,  it  is  thus  easy,  of  course,  to  determine 
relatively  the  chances  of  employment.  Thus, 
if  the  stone-working  trade  is  overdone,  the  en- 
deavor on  the  part  of  the  school  administration 
is  to  guide  boys  who  might  otherwise  be  adapted 
to  stone-working  into  some  related  building 
trade  in  which  opportunities  for  work  would  be 
greater.  By  co-operation  among  the  German 


46         MONARCHICAL  SOCIALISM 

states  it  is  expected  that  the  supply  and  demand 
in  individual  callings  will  be  understood  so  com- 
pletely that  a  continuous  process  of  adjustment 
will  maintain  the  equilibrium  between  supply 
and  demand  in  all  trades.  The  design  is  to  re- 
place the  haphazard  distribution  of  workers  by 
a  balanced  system.  The  boy,  who  can  know 
nothing  accurately  about  the  position  of  the 
labor  market,  owing  perhaps  to  the  operation  of 
international  causes,  will  be  spared  the  tragedy 
of  going  into  a  dying  trade.  The  effort  will  be 
to  place  him  in  a  trade  in  which  he  will  have  an 
equal  chance  with  others  to  obtain  employment 
and  keep  it. 

The  German  governmental  theory  of  the  col- 
lective responsibility  of  society  to  the  individual, 
and  of  exacting  from  the  individual  proportion- 
ate service  to  the  whole,  works  out  in  industrial 
education,  as  I  have  indicated,  in  two  principles 
of  action,  intelligent  persuasion  and  compulsion. 
One  is  intended  to  be  the  complement  of  the 
other.  Compulsion  is  congenial  to  the  German 
in  command.  X  The  discipline  of  the  home  and 
the  elementary  school  is  naturally  extended  to  the 
workshop.  The  merits  of  compulsory  attendance 
are  summarized  in  an  old  decree  of  the  Minister 
of  Trade  and  Commerce,  that  of  1899,  thus: 

&hf+C-    AH    Ct-tUi  \  !$^Qrt^jfrW»L  I  / 
,  '  *  f  f 


O~»*4L 


THE  PASSING  OF  THE  UNSKILLED    47 

"There  are  still  some  who  think  that  voluntary 
attendance  at  industrial  continuation  schools  is 
preferable  to  compulsory  attendance.  I  con- 
sider it  my  duty  to  draw  attention  to  the  recog- 
nized fact  that,  according  to  all  experience  known 
to  the  present  time,  the  continuation  school  only 
flourishes  and  fulfils  its  purpose  if  attendance  is 
made  compulsory  by  a  local  by-law.  The  oppo- 
nents of  compulsory  attendance  maintain  that 
it  lowers  the  standard  of  the  schools.  It  is  con- 
tended that  the  voluntary  pupils  are  willing  and 
ready  to  learn,  whereas  those  who  are  compelled 
to  attend  are  refractory  and  lazy,  and  thus  im- 
pede the  progress  of  the  better  pupils  and  make 
it  difficult  to  maintain  school  discipline.  I  ad- 
mit that,  among  the  number  of  industrial  labor- 
ers under  eighteen  years  of  age  who  are  brought 
to  school  by  compulsory  attendance,  there  may 
be  some  undesirables  who  cannot  be  brought 
under  school  discipline.  But  this  drawback  can 
be  obviated  by  a  proper  classification  of  the 
pupils,  especially  by  rigorously  enforcing  the 
grading  system  and  by  employing  suitable 
teachers.  Moreover,  the  difficulty  can  be  over- 
come if,  injiie  initial  stage  of  the  compulsory 
system,  those  young  persons  who  have  been  out 
of  school  for  several  years  are  not  admitted.  In 


48        MONARCHICAL  SOCIALISM 

the  earlier  stages,  the  by-law  should  only  be  en- 
forced for  the  lowest  stage  of  the  continuation 
school,  and  should  be  extended  in  operation 
year  by  year.  Experience  shows  that  attend- 
ance at  the  continuation  school  will  soon  be 
regarded  as  a  matter  of  course,  just  as  is  the 
case  with  attendance  at  the  elementary  schools. 
This  plan  has  the  further  advantage  of  grad- 
ually building  up  the  school  stage  by  stage. 
This  meets  another  objection,  viz.,  that  any 
sudden  increase  in  the  number  of  pupils  would 
make  too  great  a  demand  for  school  places  and 
that  the  expense  of  providing  them  would  be 
beyond  the  means  of  most  of  the  communities. 
The  critics  of  the  compulsory  system  further 
maintain  that  schools  with  voluntary  attend- 
ance show  better  educational  results.  This 
statement  is  certainly  wrong,  and  the  tests  lately 
instituted  by  me  prove  the  contrary.  Irregular 
and  unpunctual  attendance  is  a  standing  com- 
plaint with  nearly  all  the  schools  when  attend- 
ance is  voluntary.  In  some  instances  it  has  hap- 
pened that  schools  with  voluntary  attendance 
have  had  to  waste  hah6  the  time  appointed  for  a 
lesson  because  sufficient  pupils  had  not  arrived 
to  make  it  possible  to  begin." 

The  pressure  to  turn  the  unskilled  into  the 


THE  PASSING  OF  THE  UNSKILLED    49 

skilled  is  applied  to  both  city  and  country  in  a 
broad  sense.  It  is  in  the  municipalities  that  this 
pressure  takes  the  form  of  artisan  training.  In 
the  country,  the  laborers  on  the  farm,  in  the 
dairy,  and  in  forestry  are  trained,  to  be  sure,  but 
are  trained  experimentally,  only  those  intended 
for  foremen  and  managers  being  sent  to  special 
schools.  In  the  percentages  that  have  been 
given  all  farm  and  mine  laborers  have  been  taken 
to  be  unskilled.  The  government  does  not  con- 
sider that  the  laborer  on  the  land  might  be  a 
source  of  danger  to  the  commonwealth  because 
he  is  not  trained  for  what  is  commonly  called 
skilled  work,  but  that,  on  the  contrary,  he  is  one 
of  the  soundest  units  of  the  community.  The 
government  does  consider  that  the  presence  in 
cities  and  industrial  centres  of  great  numbers  of 
unskilled  laborers  is  a  weakness  that  must  be 
overcome. 

Who,  then,  will  do  the  coarse  work  of  Ger- 
many if  the  present  ideal  of  converting  every 
German  into  a  skilled  workman  is  attained? 
The  landed  proprietor  complains  now  of  the 
scarcity  of  labor,  largely  due  to  the  migration  to 
the  towns  of  the  young  people  from  the  country. 
The  land-owners  in  1911  employed  565,000  for- 
eign laborers  between  January  1  and  October  1, 


50         MONARCHICAL  SOCIALISM 

as  is  shown  by  the  number  of  special  passes 
issued  to  foreign  agricultural  laborers  from  Rus- 
sia, Poland,  the  Austrian  states,  and  Italy. 
Twenty  per  cent  of  the  miners  in  Westphalia  are 
foreigners,  and  8  per  cent  are  Italians.  The  num- 
ber of  foreigners  employed  in  industry  as  com- 
mon laborers  was  440,000,  of  whom  18  per  cent 
were  from  Italy,  10  per  cent  from  the  Nether- 
lands, and  the  remainder  largely  from  the  states 
to  the  eastward.  A  vast  movement  of  foreign- 
ers to  and  from  Germany  increases  yearly.  The 
foreign  laborer  is  attracted  by  the  higher  wages 
that  he  can  earn  there  over  those  paid  in  his  own 
country.  He  is  able  to  pay  transportation  both 
ways  each  year,  for  under  the  German  laws  the 
foreign  laborer  may  not  remain  in  the  country 
longer  than  one  year,  and  the  field  laborer  usu- 
ally remains  about  nine  months.  The  state  puts 
obstacles  in  the  way  of  foreigners  doing  skilled 
work.  The  police,  under  the  close  registration 
system,  take  note  of  a  foreigner  holding  a  work- 
man's pass  who  engages  in  higher  manual  em- 
ployment. The  employer's  attention  is  drawn 
to  the  fact  that  the  man  in  question  is  a  for- 
eigner; and  under  the  statutes  of  some  states  the 
employer  is  obliged  to  discharge  a  foreign  work- 
man. Obstacles  are  also  placed  in  the  way  of 


THE  PASSING  OF  THE  UNSKILLED    51 

ordinary  workmen  becoming  German  subjects. 
Naturalization  is  refused  to  workingmen,  except 
under  special  conditions.  Many  workmen  from 
the  eastern  European  countries  who  might  other- 
wise settle  in  Germany  emigrate  to  the  United 
States. 

The  son  of  a  common  laborer  or  of  a  farm  hand 
takes  up  a  trade  and  goes  to  the  city.  The  son 
of  the  artisan  becomes  a  bookkeeper,  a  minor 
civil  servant,  a  shopkeeper,  or  a  draughtsman. 
The  daughters  of  artisans  refuse  domestic  service 
and  go  into  shops,  counting-rooms,  or  industrial 
art-work.  The  children  of  those  in  turn  strive 
for  social  position  and  better  wages  by  studying 
in  the  higher  technical  schools  and  becoming  en- 
gineers, illustrators,  or  factory  chemists.  While 
the  ministries  of  education  and  of  commerce  and 
industry  seek  to  stimulate  the  children  of  those 
on  the  lowest  levels  to  become  skilled  workers, 
the  effort  is  also  made  to  prevent  too  many  from 
going  into  the  higher  technical  fields,  because 
Germany  cannot  give  opportunities  to  the  thou- 
sands graduating  yearly  from  the  technical  uni- 
versities. The  surplus  scientific  proletariat  is 
obliged  to  find  employment  in  other  countries, 
England,  France,  ,the  United  States,  in  compe- 
tition with  Germany. 


52        MONARCHICAL  SOCIALISM 

The  processes  at  work  tend  to  convert  the 
whole  population  into  the  users  of  tools  and  ma- 
chinery. The  theory  of  those  directing  the  ar- 
tisan training  is  that  the  time  is  not  remote 
when  all  common  labor  will  be  done  by  the  ma- 
chine user  who  will  bring  to  his  work  knowledge 
and  zest. 


IV 

LABOR  EXCHANGES  IN  GERMANY 

GERMANY,  looked  upon  casually  from 
abroad,  has  long  seemed  to  be  overflow- 
ing her  frontiers  and,  owing  to  the 
pressure  of  population,  to  be  falling  below  what 
might  have  been  her  numbers  and  power  had  her 
territories  been  wider.  That  was  true  up  to  a 
generation  ago,  when  emigration  from  German 
states  rose  above  200,000  annually.  The  dissat- 
isfied, the  enterprising,  the  adventurous,  without 
the  solicitations  of  the  steam-ship  agent,  sought 
the  Golden  West.  The  Imperial  Ministry  of 
Marine,  in  assembling  reasons  in  1905  for  naval 
expansion,  presented  figures  to  parliament  show- 
ing that  3,000,000  born  in  Germany  lived  abroad 
and  that  2,250,000  of  them  had  become  citizens 
of  other  countries.  But  from  the  year  1881, 
when  migration  reached  220,902,  the  number  go- 
ing over  seas  for  fortune  or  social  betterment  fell 
to  19,883  in  1908  and  rose  slightly  in  the  follow- 
ing years  to  22,690  in  1911.  Strangely  enough, 
the  number  of  immigrants  who  have  become 
German  subjects  or  permanent  residents  has  av- 

53 


54         MONARCHICAL  SOCIALISM 

eraged  during  the  last  fifteen  years  9,000  more 
annually  than  the  emigrants.  Every  year  some 
thousands  who  left  in  their  youth  come  back 
well-to-do  to  live  again  at  home.  Other  thou- 
sands from  all  countries  of  Europe  settle  there  to 
share  in  economic  opportunities  which  they  think 
Germany  has  over  their  own  countries. 

The  present  population  of  65,000,000  increases 
through  the  excess  of  births  over  deaths  by  900,- 
000  yearly,  or  at  about  the  rate  the  population  of 
the  United  States  increases  excluding  immigra- 
tion. The  resources  of  Germany,  as  at  present 
managed,  are  therefore  sufficient  to  attract  more 
than  enough  immigration  to  replace  emigration 
and  to  take  care  of  the  excess  of  900,000  newly 
born  subjects  beyond  the  number  that  have  died. 
Besides  meeting  these  responsibilities,  German 
production  is  able  to  provide  a  living  for  1,000,- 
000  foreign  laborers  admitted  on  special  pass- 
ports to  do  rough  work  —  chiefly  on  farms  or  in 
mines,  as  we  have  seen  in  a  preceding  chapter. 

Something  happened  in  Germany  in  the 
eighties  that  changed  the  outlook  on  life,  and 
whose  influence  penetrated  to  those  classes  which 
had  previously  supplied  the  enormous  emigra- 
tion. Bismarck,  speaking  in  the  Reichstag, 
June  14,  1882,  said: 


LABOR  EXCHANGES  IN  GERMANY    55 

"I  have  often  drawn  attention  to  the  fact  that 
emigration  is  not  a  consequence  of  over-popu- 
lation, for  emigration  is  smallest  from  over-popu- 
lated parts  of  the  country;  it  is  greatest  from  the 
least  populous  provinces.  ...  In  a  purely  agri- 
cultural population  the  career  which  a  laborer 
can  follow  is  straightforward  and  without  change. 
When  he  is  twenty-eight  or  thirty  years  old,  he  is 
able  to  overlook  his  work  to  the  end.  He  knows 
how  much  he  can  earn  and  he  knows  that  it  is 
impossible  by  means  of  an  agricultural  occupa- 
tion to  raise  himself  above  his  condition.  ...  In 
industry  a  workman  cannot  foresee  how  his  life 
will  close,  even  if  he  should  not  raise  himself 
above  the  common  level,  and  should  have  no 
connections.  We  have  very  many  manufacturers 
who  in  one  or  two  generations  have  risen  from 
simple  artisans  into  millionaires,  powerful  and 
important  men.  I  need  not  name  any  such  men 
to  you  —  the  names  are  on  everybody's  lips,  and 
they  are  also  on  the  lips  of  the  workingman.  For 
the  artisan,  industry  has  the  marshal's  baton, 
which  it  is  said  the  French  soldier  carries  in  his 
knapsack.  This  raises  and  animates  the  hopes 
of  the  artisan  and  he  does  not  need  to  become  a 
millionaire.  Industry  furnishes  a  thousand  ex- 
amples such  as  I  have  myself  seen  in  Pomerania, 


56         MONARCHICAL  SOCIALISM 

little  affected  though  it  is  by  industry,  of  how  the 
man  who  as  an  agricultural  laborer  never  gets 
beyond  ordinary  day's  wages,  can  in  the  factory, 
as  soon  as  he  shows  more  skill  than  others,  earn 
much  higher  wages  and  eventually  rise  to  the 
position  of  manager  and  higher;  indeed,  skilled 
workmen,  who  often  go  farther  as  self-taught 
men  than  the  most  learned  technologists,  may 
hope  to  become  partners  of  their  employers. 
The  prospect  keeps  hope  active  and  increases  the 
pleasure  in  work.  ...  It  is  the  destruction  of 
hope  in  a  man  that  drives  him  to  emigration." 

The  something  that  happened  in  Germany  in 
the  eighties  was  that  industrial  and  commercial 
expansion  attained  momentum  and  began  to 
flourish  because  of  the  character  and  the  uni- 
versal mental  training  of  the  people.  Also,  Bis- 
marck began  to  graft  upon  monarchical  and 
aristocratic  institutions  his  vast  schemes  of  gov- 
ernment supervision  and  participation  in  busi- 
ness, and  compulsory  provision  for  the  ill,  the 
disabled,  and  the  aged.1  Bismarck's  long  con- 
versations with  Ferdinand  Lasalle,  a  good  many 
years  before,  became  fruitful  in  a  quite  different 
way  from  the  aims  of  the  great  socialist.  Bis- 
marck undertook  to  adjust  limited  collectivism  to 

1  See  Appendix  A. 


LABOR  EXCHANGES  IN  GERMANY    57 

the  monarchy.  His  ideas  for  economic  reor- 
ganization have  been  understood  in  their  full 
meaning  in  recent  years  only.  It  will  probably 
take  more  decades  than  have  passed  already,  to 
test  the  soundness  of  his  internal  policies  and 
for  other  states  to  determine  whether  they  must 
follow  and  imitate  them.  Besides  leading  the 
monarchy  into  state  ownership  of  transporta- 
tion, and  imposing  under  government  insurance 
compulsory  thrift  upon  employed  and  enforced 
contributions  from  the  employer,  Bismarck  un- 
dertook to  interpose  the  powers  of  the  state  be- 
tween the  employer  and  the  work  people,  and 
interweave  the  powers  of  administration  with 
what  had  hitherto  been  considered  individual 
rights.  Under  his  initiative  the  Prussian  fiscus, 
the  bureau  supervising  state  domains,  forests, 
and  mines,  became  an  active  dealer  in  real 
estate,  and  is  now  the  greatest  land  speculator 
in  Germany,  taking  care  to  secure  for  the  state 
as  much  "unearned  increment"  as  the  rise  in 
city  and  country  land  values  yields  to  large 
capitals  and  to  time. 

One  may  attribute  too  much  to  Bismarck  in 
statesmanship,  because  it  is  not  easy  to  discrim- 
inate between  what  he  did  and  the  force  of 
the  political  and  economic  thought  of  his  time, 


58         MONARCHICAL  SOCIALISM 

which,  although  led  by  him,  also  impelled  him  in 
the  direction  that  Germany  has  taken  in  social 
legislation.  Among  the  ways  that  government 
and  public  associations  have  taken  to  bring  or- 
der into  the  confusion  caused  by  "hard  times" 
and  unemployment,  from  whatever  cause,  is  that 
by  labor  exchange.  The  endeavor  is  to  bring 
plan  and  effective  intelligence  into  a  field  where 
the  haphazard  personal  canvass  of  the  individ- 
ual has  often  been  his  only  means  of  selling  his 
labor.  The  man  out  of  work  is  now  able  through 
the  labor  registries,  and  their  co-operation  with 
one  another,  to  know  the  conditions  in  his  trade 
in  all  the  industrial  districts  in  Germany.  Em- 
ployment fluctuates  in  ordinary  times  according 
to  the  orders  ahead,  and  often  with  the  courage 
and  enterprise  of  the  employing  company.  A 
high  purpose  of  the  labor  bourses  is  to  make 
fluid  the  labor  surplus,  so  that  it  may  flow  into 
the  changing  forms  of  production,  take  the  work 
to  be  done  and  meet  the  requirements  of  the  em- 
ployer, no  matter  in  what  part  of  Germany  he 
may  be.  The  question  of  transportation  is  dis- 
posed of  in  most  states  by  the  government-owned 
railways  giving  reduced  rates  to  the  man  going 
for  work.  The  conviction  resting  upon  much 
experience  is  that  national  industry  is  served  ef- 


LABOR  EXCHANGES  IN  GERMANY    59 

fectively  by  making  it  a  simple  transaction  for 
the  man  out  of  work  to  get  it  immediately  an 
opening  occurs  in  any  part  of  the  empire,  and 
for  the  manager  who  wants  help  to  have  it  with- 
out delay. 

These  labor  markets  are  a  curious  develop- 
ment of  the  time.  In  them  3,708,000  men  and 
women  put  up  their  services  for  sale  in  1910. 
Employers  offered  2,208,000  places,  and  1,524,- 
000  of  them  were  bought  and  sold.1  Five  years 
have  seen  transactions  in  these  markets  doubled. 
In  some  cities  almost  all  the  unskilled  labor  is 
marketed  in  the  local  exchange.  High  percent- 
ages of  skilled  workmen  and  the  employers  of 
skilled  artisans  find  in  the  exchange  the  largest 
opportunity  and  the  largest  selection.  Hence 
the  business  of  the  exchanges  has  expanded 
sometimes  100  per  cent  a  year.  Thus  the  Ber- 
lin suburban  exchange,  at  Charlottenburg,  filled 
15,690  positions  in  1910,  as  compared  with  7,595 
the  preceding  year.  In  Wiesbaden,  the  figures 
for  the  same  years  were  13,628  and  7,970.  The 
municipal  bureau  in  the  little  city  of  Rends- 
burg  arranged  employment  for  1,884  persons 
compared  with  619.  The  numbers  in  the  gun- 

1  The  figures  for  1911  are  not  yet  fully  made  up  in  available  form,  but 
they  show  a  general  increase  *>f  19  per  cent  in  the  number  of  workmen 
placed.  —  AUTHOB. 


60        MONARCHICAL  SOCIALISM 

making  town  of  Essen^  were  9,656  and  5,329. 
Municipal  labor  bourses  in  cities  such  as  Diissel- 
dorf,  Wiesbaden,  Magdeburg,  Posen  have  con- 
centrated in  their  offices  almost  all  the  transfers 
in  certain  classes  of  employment. 

A  variety  of  employment  offices  existed  before 
state  or  municipal  governments  were  convinced 
of  the  propriety  of  using  public  funds  for  facili- 
tating private  contracts  between  master  and  man. 
Trades-unions,  guilds,  associations  of  employers, 
societies  providing  relief  for  the  indigent  unem- 
ployed, had  long  tried  to  bring  effective  direction 
to  the  man-out-of-work  and  to  the  employer 
wanting  hands.  The  ordinary  way  of  recruiting 
labor  from  the  men  hanging  around  the  factory 
gates,  or  of  a  man  finding  work  by  tramping  from 
one  set  of  works  to  another,  was  perceived  to  be 
inefficient.  Benevolent  observers,  unions,  and 
employers'  organizations  started  offices  where 
men  could  inquire  for  vacancies,  and  where  the 
unexpected  requirements  of  mines  and  shops 
could  be  met.  The  basis  of  these  agencies  was 
found  to  be  inadequate.  They  were  managed 
from  what  might  be  called  particularist  policies. 
If  they  were  employers'  associations  the  tendency 
was  to  depress  wages  and  to  form  blacklists.  If 
they  were  relief  stations  for  the  very  poor,  or 


LABOR  EXCHANGES  IN  GERMANY    61 

those  who  had  been  brought  low  by  detrimental 
habits,  too  much  stress  was  placed  upon  moral 
qualities,  and  efficiency  was  often  below  100  per 
cent.  The  sense  of  collective  responsibility  in 
Germany  increased.  The  professors  of  scientific 
state  organization  were  bothered  by  the  hap- 
hazard situation  of  the  unemployed.  Every  day 
of  preventable  delay  in  the  sound  unemployed 
unit  getting  work  meant  a  certain  deterioration  in 
the  man,  a  drain  upon  some  fund  for  the  unem- 
ployed, the  under-nourishment  of  his  children,  or 
discontent  with  political  and  social  conditions. 
The  failure  of  any  employer,  by  even  a  day,  to 
have  work  done  reduced  by  that  much  the  pro- 
duction of  the  nation,  and  was,  therefore,  eco- 
nomic waste.  When  some  tens  of  thousands  are 
idle  in  a  country  because  they  do  not  know  of 
positions  already  vacant,  or  because  they  live  in 
localities  distant  from  the  vacant  places,  the  col- 
lective loss  would  maintain  an  army  corps,  or 
pay  the  year's  bill  for  new  naval  construction. 
The  reasons  have  been  considered  sufficient  to 
justify  most  German  states,  municipalities  in  in- 
dustrial districts,,  and  semi-official  agricultural 
chambers  in  farming  provinces  in  using  public 
funds  to  finance  labor  exchanges.  Although  in 
cities  the  exchanges  are  largely  in  municipal  con- 


62        MONARCHICAL  SOCIALISM 

trol,  others  are  managed  by  societies  receiving 
state  or  municipal  appropriations. 

The  exchange  most  important  in  Germany, 
and  the  one  upon  which  many  a  municipal  bourse 
in  the  provinces  is  modelled,  is  the  Berlin  Labor 
Exchange  (Centralverein  fur  Arbeitsnachweis). 
The  Exchange  was  founded  in  1883,  by  a  society 
that  had  the  aim  only  to  mediate  for  a  work- 
seeker  without  regard  to  any  fact  about  him 
except  that  he  looked  for  employment.  If  he 
could  work,  the  society  undertook  to  bring  him 
into  relations  with  the  person  who  needed  a 
worker  of  his  grade.  The  society  undertook, 
also,  to  satisfy  employers  by  the  fitness  of  the 
labor  supplied.  The  employer  was  spared  the 
preliminary  examination  of  record  and  refer- 
ences and  the  personal  "sizing-up"  of  the  candi- 
date, this  being  done  with  skill  by  the  exchange 
manager.  A  reputation  was  founded  for  effi- 
ciency and  good-will  toward  all  interests.  Un- 
der a  liberal  organization,  the  Exchange  has 
drawn  in  the  employment  bureaus  of  many 
unions,  among  them  the  upholsterers,  plumbers, 
painters,  bookbinders,  locksmiths,  laundresses, 
and  female  linen  workers.  The  unions  share  in 
the  management.  The  board  of  twenty-one  is 
advised  by  an  executive  committee  of  employers 


LABOR  EXCHANGES  IN  GERMANY    63 

and  workmen  in  each  branch  of  industry  repre- 
sented on  the  Exchange.  Associations  of  employ- 
ers designate  their  members,  and  the  unions  and 
apprentices'  committees  theirs.  Consequently, 
the  management  is  in  the  hands  of  employ- 
ers and  men  who  have  personal  knowledge  of 
the  situations  in  their  lines  and  are  able  to  assign 
men  to  vacant  places  with  certainty  of  judgment. 
Unskilled  workers  are  represented  by  members 
of  the  industrial  court. 

The  Berlin  Exchange  is  a  huge  brick  structure, 
built  by  the  Imperial  Insurance  Office,  which  has 
at  its  disposal  the  immense  capitals  accumulated 
for  the  national  old-age  pensions  and  other  so- 
cial insurances.  The  Exchange  pays  the  office 
a  rental  equivalent  to  two  and  a  half  per  cent  on 
the  investment  and  the  city  of  Berlin  guarantees 
a  yearly  subsidy  sufficient  to  cover  the  charge. 
The  municipality  contributes,  also,  $10,000 
(40,000  marks)  for  working  expenses,  which  last 
year  were  about  $25,000.  The  other  $15,000 
was  derived  from  the  five-cent  fee  charged  work- 
men for  registration.  The  employers  pay  noth- 
ing, because  the  administration  in  Berlin  and 
elsewhere  considers  it  sound  policy  not  to  have 
the  least  obstacle  to  employers  using  the  Ex- 
change. A  supply  of  labor  in  most  departments 


64        MONARCHICAL  SOCIALISM 

is  always  there,  but  the  demand  must  be  en- 
couraged. The  success  of  the  exchanges  tends 
toward  obliging  employers  to  apply  to  them  for 
hands  or  have  difficulty  in  getting  them  from 
casual  sources,  which  are  disappearing  because 
the  exchanges  are  monopolizing  the  supply. 
Labor  has  become  standardized,  as  it  were,  and 
the  personal  side  of  the  free  contract  between 
the  master  and  man  has  disappeared.  The 
submanager  of  locomotive  works,  for  example, 
simply  wants  ten  more  brass-workers,  or  twenty- 
five  additional  metal-planers,  and  prefers  to  tele- 
phone the  Exchange  rather  than  bother  to  send 
word  to  a  waiting  list  or  to  examine  the  men 
around  the  yard  entrance.  Besides,  if  he  has 
ever  done  business  with  the  Exchange  he  has 
probably  been  satisfied  with  the  standard  quality 
of  the  men  sent  him.  Should  the  manager  upon 
seeing  the  men  desire  to  reject  some  of  them,  all 
he  need  do,  and  that  is  not  obligatory,  is  to  pay 
their  carfare  back  and  ask  for  another  lot  to  re- 
place the  ones  he  did  not  like. 

The  institution  in  Berlin  has  three  vast  apart- 
ments. One  for  skilled  workmen,  arranged  ac- 
cording to  trades,  accommodates  conveniently 
2,000,  another  1,000  to  1,500  unskilled  laborers, 
while  the  third  is  for  women.  The  Exchange 


LABOR  EXCHANGES  IN  GERMANY    65 

somewhat  resembles  a  vast  workingman's  club 
with  a  women's  annex.  The  place  has  about  it 
none  of  the  depressing  suggestions  of  unemploy- 
ment, none  of  that  dreary  atmosphere  of  the 
groups  around  the  factory  entrance  waiting  for 
something  to  do  —  with  all  the  disadvantages  on 
the  side  of  the  individual  down  in  the  world  and 
worried.  Deserting  the  factory  gate,  he  offers 
his  services  in  the  recognized  brokerage,  the  one 
to  which  employers  of  his  class  of  labor  will,  in 
fact  must,  apply.  He  will  be  registered  there  no 
longer  than  a  day  before  his  number  is  advanced 
on  the  list.  Some,  perhaps  all,  of  the  men  who 
were  ahead  of  him  will  have  been  employed. 
Within  two  weeks,  on  an  average,  the  man  offering 
skilled  labor  and  belonging  to  a  union  is  engaged. 
The  unemployment  in  Germany  has  ranged,  dur- 
ing eight  years,  from  one  and  one-tenth  per  cent 
of  the  wage-earning  population  in  1906,  the  low- 
est year,  to  two  and  nine-tenths  per  cent  in  1908, 
the  highest  year  since  the  government  has  cal- 
culated percentages  covering  the  whole  empire. 
In  1909,  the  percentage  out  of  work  during  the 
year  averaged  two  and  eight-tenths  per  cent,  or 
an  average  of  nine  days  in  the  year  if  the  whole 
employed  wage-takers  are  considered.  In  1910 
and  1911  the  percentages  were  slightly  less.  Since 


66         MONARCHICAL  SOCIALISM 

fluctuations  in  employment  do  not  affect  great 
numbers  of  the  employed,  the  period  of  loss  of 
work  for  those  actually  unemployed  is  consider- 
ably longer.  The  operation  of  the  labor  bourses 
has  the  result  of  equalizing  the  terms  of  unem- 
ployment so  that  the  loss  of  work  is  distributed 
more  evenly.  No  individual  runs  the  hazard  of 
not  finding  work  for  months.  The  only  prefer- 
ence on  the  Exchange  is  for  married  men,  who,  as 
against  the  unmarried,  are  served  first.  Em- 
ployers appear  to  prefer  unionists  for  two  rea- 
sons: because  they  have  no  trouble  on  that  ac- 
count with  their  other  men,  and  because  the 
union  member  is  nearly  always  a  qualified  work- 
man. 

On  the  unskilled-labor  floor  the  waiting  time  is 
longer.  During  bad  seasons  a  man  may  wait  a 
month  to  earn  the  lowest  wage.  The  waiting, 
whether  in  the  skilled  or  unskilled  divisions,  is 
under  rather  agreeable  conditions.  The  great 
rooms  are  astir  with  activity.  Telephone  bells, 
the  communications  of  sub-managers  to  the 
classified  sections,  the  summons  of  a  coppersmith 
from  his  group,  or  of  five  glass-blowers,  or  a 
dozen  steam-fitters  from  their  divisions,  engage 
the  interest  of  the  new-comer.  Checkers,  dom- 
inoes, and  chess  are  played,  but  no  cards.  The 


LABOR  EXCHANGES  IN  GERMANY    67 

restaurant  supplies  a  meal,  a  drink,  and  a  cigar 
for  seven  and  a  half  cents  (thirty  pfennigs)  — 
ten  pfennigs  for  two  rolls,  another  ten  for  sau- 
sage, five  for  beer,  and  five  for  a  cigar.  Then 
from  400  to  600  persons  are  employed  every  day, 
or,  to  be  precise,  447  on  an  average  for  each 
working-day.  The  man-out-of-work  may  go 
home  without  a  job,  but  he  has  had  a  not  un- 
pleasant day  talking  politics,  playing  a  game, 
getting  a  dinner  at  the  lowest  price,  and  if  he 
needs  them  the  attentions  of  clothes-menders, 
cobblers,  and  barbers,  so  that  he  may  keep  a 
good  front  toward  the  world.  The  effect  of  the 
whole  is  psychologically  stimulating. 

Upon  the  women's  board  the  supply  is  less  than 
the  demand.  Employers  offered  46,935  places 
while  36,026  women  and  girls  applied  for  them 
and  only  28,843  accepted  offers,  or  an  average  of 
65  in  the  hundred.  The  widest  disproportion 
was  in  the  domestic-service  division,  one  of  the 
smallest  in  the  Exchange,  probably  because  both 
mistresses  and  servants  find  the  neighborhood 
employment  agency  the  more  convenient,  even 
though  a  fee  is  charged.  The  government  in 
1910  placed  all  private  agencies  under  close  su- 
pervision, fixing  fees  and  observing  transactions. 
However,  1,170  servant-girls  entered  themselves 


68         MONARCHICAL  SOCIALISM 

at  the  Exchange  in  1910  and  1,031  took  service 
from  among  3,528  offers.  The  mistresses  in  this 
instance  go  there  to  be  examined  by  the  maids. 
The  women's  domestic-service  department  is  the 
envy  of  men  out  of  work,  and  many  an  amusing 
little  tale  is  told  of  the  manner  in  which  the  pre- 
tensions of  madame  are  reduced  by  the  inde- 
pendence of  the  maid.  The  director  of  the 
unskilled  department  has  overheard  the  men  de- 
scribing imaginary  interviews,  after  the  style 
of  the  domestic,  between  themselves  and  the 
imaginary  employer,  with  amusing  stipulations 
concerning  the  beer  allowance,  days  off,  family 
dinner  in  the  middle  of  the  day,  cold  supper  at 
night,  and  laundry  limitations.  Few  women 
workers  are  out  of  a  position  more  than  a  day  or 
two.  The  law  respecting  two  weeks'  notice  and 
three  afternoons  out  to  find  another  place  is  ob- 
served almost  absolutely  by  employers. 

Some  odd  particulars  about  the  occupations  of 
men  are  tabulated  in  the  reports  of  the  imperial 
labor  department.  Only  one  cigar-maker  was 
out  of  work  in  the  first  quarter  of  1909  in  the 
whole  country,  and  none  was  reported  as  idle  the 
second  quarter.  Then,  owing  to  an  increase  in 
the  tobacco  taxes,  183  were  unemployed  the  next 
quarter,  and  107  the  last  three  months  of  the 


LABOR  EXCHANGES  IN  GERMANY    69 

year.  The  preceding  year  eight  tobacco-work- 
ers were  unengaged  during  the  twelve  months, 
and  at  no  one  time  were  more  than  three  out  of 
places  among  a  total  of  203,224  workers  in  to- 
bacco. Unemployment  among  miners,  doubt- 
less due  to  the  hard,  dreary,  poorly  paid  work, 
runs  low.  The  miners'  unions  reported  to  the 
government  that  during  the  first  quarter  of  1909 
48  were  out  of  work.  The  largest  number  in  any 
quarter  of  the  year  was  253,  while  during  the 
same  year  thirty-seven  per  cent  of  the  journey- 
men barbers  were  unengaged  at  one  time. 

The  number  of  unemployed  in  Germany  ap- 
pears to  be  smaller,  relatively,  than  in  other 
industrial  countries.  International  comparisons 
are  difficult  because  of  the  different  methods  used 
by  the  labor  departments  in  various  countries  in 
obtaining  figures  of  unemployment.  The  British 
Board  of  Trade  issued  in  January  1911  a  fourth 
official  compilation  of  foreign  labor  statistics, 
in  which  percentages  were  given  of  the  fluct- 
uations in  employment  in  Germany,  the  United 
States,  France,  Belgium,  and  Denmark,  based 
upon  the  reports  of  trades-unions  to  the  govern- 
ments of  the  European  countries  mentioned  and 
to  the  State  governments  of  New  York  and  Mas- 
sachusetts. The  percentages  of  unemployed  were : 


70 


MONARCHICAL  SOCIALISM 


TEAS 

GERMANY 

FRANCE 

UNITED 
STATES 

BELGIUM 

DENMARK 

1903   . 

2.7 

10.1 

3.4 

1904        .  .    . 

2.7 

10.8 

12.1 

3.0 

1905  

1.6 

9.9 

8.5 

2.1 

13.28 

1906  

1.1 

8.4 

6.8 

1.8 

6.12 

1907  

1.6 

7.5 

13.6 

2.0 

6.79 

1908  

2.9 

9.5 

28.1 

5.9 

10.96 

1909  

2.8 

8.1 

14.9 

3.4 

13.32 

The  British  report,  while  indicating  that  the 
statistics  must  be  taken  with  caution  in  making 
contrasts  between  countries,  affirms  that  the  per- 
centages form  a  useful  index  to  the  fluctuations 
in  the  labor  markets  of  the  countries  themselves. 
The  percentages  in  Germany,  as  will  have  been 
noted,  are  not  only  far  below  those  of  other  coun- 
tries, but  they  are  less  irregular  than  those  else- 
where, except  in  France.  The  figures  for  the 
United  States  were  derived  from  the  statistics  of 
New  York  and  Massachusetts  alone  and  are  fur- 
ther impaired  by  the  circumstance  that  the  build- 
ing and  wood-working  trades  in  those  States 
were  represented  in  New  York  by  thirty-four 
per  cent,  and  in  Massachusetts  by  twenty-three 
per  cent,  of  the  totals.  The  fluctuations  in  these 
trades  are  more  violent  than  in  any  others. 
The  steadiness  of  employment  in  Germany  is 
wrought  by  a  variety  of  causes  found  in  the  char- 


LABOR  EXCHANGES  IN  GERMANY    71 

acter  and  institutions  of  the  people,  but  among 
them  may  be  placed  the  contributing  influence 
of  the  712  labor  bourses  in  intimate  co-operation. 
They  do  not  originate  opportunities  to  work. 
They  do  take  over  the  task  of  seeing  that  neither 
the  machinery  of  production  nor  the  man  willing 
and  competent  to  produce  shall  be  hindered 
from  coming  into  relations  by  so  much  as  an 
hour  of  delay  preventable  by  intelligence  and 
organization. 

Not  far  from  where  employable  labor  waits  in 
Berlin  for  opportunity  is  the  vast  asylum  for  the 
night  (Nachtasyl)  maintained  by  the  munici- 
pality. It  is  a  last  crumbling  foothold  of  those 
mostly  unemployable  before  the  police  arrest, 
and  the  magistrate  condemns  to  forced  labor  on 
the  city  sewage  farms.  There  from  3,000  to  5,000 
men,  women,  and  children  are  fed  and  lodged  for 
the  night,  but  they  may  not  be  taken  in  oftener 
than  five  nights  in  three  months.  The  stream  of 
broken  lives  flowing  through  those  iron-bedded 
halls  sends  a  rivulet  to  the  Exchange,  which  un- 
dertakes to  do  for  the  man  on  the  edge  of  the 
abyss  what  he  cannot  do  for  himself.  The 
others,  society  cannot  yet  tell  why,  disappear 
into  the  depths. 


EXPERIMENTS  WITH  UNEMPLOYMENT 
INSURANCE 

POLITICAL  thinking  in  Germany,  begin- 
ning with  the  later  Bismarckian  days, 
abandoned  the  idea  that  the  individual 
alone  is  responsible  for  his  situation  in  life,  his 
employment  or  unemployment,  and  decided  that 
somehow  inwoven  with  individual  responsibility 
is  the  responsibility  of  society,  of  the  whole  state. 
This  way  of  thinking  may  now  be  called  the  min- 
imum German  state  socialism,  the  kind  of  think- 
ing that  is  still  called  radical  in  Great  Britain  or 
in  America,  but  in  Germany  is  conservative.  It 
became  evident  to  observers  that  the  loss  of  em- 
ployment in  industrial  crises  was  brought  about 
by  events  over  which  the  workman  could  have 
no  control.  Besides  periodical  depressions,  the 
development  of  immense  organizations,  formerly 
unknown,  in  the  management  of  which  the  indi- 
vidual workman  does  not  participate  and  in 
which  there  can  be  no  direct  bargain  between 

the  managing  employer  and  the  employed,  has 

72 


UNEMPLOYMENT  INSURANCE     73 

brought  economists  and  the  governments  of  Ger- 
man states  to  the  conviction  that  the  state  or 
the  local  government  must  justly  share  responsi- 
bility for  unemployment  and  must  devise  meas- 
ures for  the  creation  of  a  fund  out  of  which  the 
unemployed  may  of  right  take  assistance.  The 
government  has  therefore  in  the  course  of  the  last 
twenty-five  years  abandoned  the  stand-point  of 
the  imperial  industrial  laws  guaranteeing  com- 
plete liberty  of  action  between  the  giver  of  labor 
and  the  applicant,  and  has  undertaken  to  inter- 
vene by  a  policy  of  protection.  This  policy  of 
protection  for  the  employee  runs  parallel  with 
protection  of  agriculture,  of  internal  trade,  of 
foreign  commerce,  and  through  an  intricate  sys- 
tem of  adjustments,  between  all  individuals, 
whether  great  capitalists  or  small  workmen,  and 
the  economic  whole.  It  has  been  therefore  an 
easy  question  to  dispose  of,  whether  public  funds 
should  be  used  in  insurance  against  the  results 
of  unemployment.  The  majorities  of  those  delib- 
erating upon  the  question  in  municipal  councils 
or  in  state  commissions  have  decided  that  such 
application  of  government  funds  is  correct  in 
principle. 

The  trying  to  think  out  and  experiment  with 
insurance  against  the  results  of  intermittent  em- 


74        MONARCHICAL  SOCIALISM 

ployment  is  a  continuance  by  German  cities  and 
the  governments  of  German  states  of  the  striv- 
ing to  squeeze  dependent  pauperism  out  of  the 
social  system,  to  round  out  the  imperial  in- 
surances begun  in  the  eighties  for  the  widow, 
the  ill,  the  aged,  the  orphan,  and  the  disabled. 
Since  the  state  enforces  compulsory  education, 
military  service,  and  precautions  for  the  health  of 
the  workman,  it  is  regarded  as  a  proper  exten- 
sion of  the  powers  of  government  to  prevent  the 
labor  unit  from  degenerating  while  temporarily 
out  of  use.  He  must  be  cared  for  and  kept  in  a 
state  of  efficiency  for  re-employment,  for  the 
army,  and  for  his  general  functions  as  a  living 
and  contributing  organism  of  the  state.  Neither 
circumstances  nor  the  individual's  own  inade- 
quate powers  of  resistance  must  be  allowed  to 
transform  him  into  a  parasite.  The  main  ele- 
ment of  the  problem  is  regarded  as  psychological, 
to  maintain  the  human  unit  in  good  condition 
by  keeping  his  spirit  in  a  healthy  state  of  self- 
respect  and  courage.  After  the  old,  the  sick, 
and  the  defective  have  been  sifted  from  the  un- 
employed and  cared  for  each  under  his  classifi- 
cation, and  after  the  police  and  the  magistrates 
have  driven  to  forced  labor  those  otherwise  able 
yet  without  the  will  to  work,  there  remain  the  ca- 


UNEMPLOYMENT  INSURANCE     75 

pable  and  the  willing  for  whom  there  is  no  work. 
Official  and  semi-official  labor  exchanges  make 
it  easy  for  the  person  who  desires  work  to  be 
brought  into  relation  with  the  person  or  com- 
pany having  work  to  give.  But  after  all  has 
been  done,  a  temporary  and  varying  surplus 
remains  of  workers  over  the  amount  of  work  to 
do.  The  solicitude  of  the  state  for  the  unem- 
ployed in  Germany  is  greater  perhaps  than  in 
most  other  countries,  because  the  imperial  policy 
is  to  make  life  at  home  easy  enough  and  endur- 
able enough  to  continue  to  keep  Germans  in 
Germany,  to  give  them  employment  and  a  sense 
of  security  for  the  future.  The  German  work- 
man does  seem  to  have  the  feeling  that  he  is 
upheld  by  the  whole  of  the  splendid  and  power- 
ful society  of  which  he  is  an  obscure  member. 
Life  is  dingy,  but  he  feels  that  he  will  not  be 
allowed  to  become  submerged  utterly,  no  matter 
what  calamities  may  happen  to  him  individu- 
ally or  to  his  trade. 

Munich,  Dresden,  Cologne,  Diisseldorf,  Ma- 
yence,  Strasburg,  Liibeck,  Rostock,  Karlsruhe, 
Elberfeld,  Magdeburg,  Cassel,  Altenburg,  Qued- 
linburg,  Erlangen,  and  Wernigerode  are  the  prin- 
cipal industrial  municipalities  that  are  operating 
some  form  of  so-called  insurance  for  unemployed. 


76         MONARCHICAL  SOCIALISM 

The  municipality  of  Cologne  has  had,  since  the 
autumn  of  1896,  an  insurance  against  hardships 
from  loss  of  work.  The  administration  is  in  the 
hands  of  a  committee  created  by  the  municipal 
council,  consisting  of  the  mayor,  the  president  of 
the  labor  exchange,  twelve  insured  workingmen 
elected  by  the  insured,  and  twelve  honorary  mem- 
bers chosen  from  the  long  list  of  prominent  citi- 
zens who  are  honorary  contributors.  The  gov- 
ernor of  the  district,  who  is  an  appointee  of  the 
Prussian  crown,  has  a  supervisory  relation  to  the 
committee.  The  fund  out  of  which  the  insur- 
ances are  paid  was  begun  by  voluntary  contribu- 
tions, amounting  to  100,000  marks,  of  manufact- 
urers, other  employers  of  labor,  and  honorary 
members.  The  city  appropriated  25,000  marks. 
The  remainder  of  the  funds,  during  a  period  of 
sixteen  years  since  the  foundation,  has  been  raised 
by  the  assessments  on  insured  workingmen;  the 
total  from  this  source,  however,  amounting  to  a 
little  more  than  one-third.  The  conditions  giv- 
ing a  workman  the  right  to  participate  in  the 
insurance  are  that  he  shall  be  eighteen  years  of 
age,  have  resided  at  least  a  year  in  the  Cologne 
district,  that  he  shall  have  a  regular  calling,  and 
that  he  must  have  paid  a  weekly  contribution  of 
from  thirty  to  forty  pfennigs  —  that  is,  seven  and 


UNEMPLOYMENT  INSURANCE     77 

a  half  to  ten  cents — weekly  for  a  period  of  thirty- 
four  weeks.  He  then  becomes  entitled,  should 
he  be  out  of  employment  during  the  winter,  from 
December  1  to  March  1,  to  be  paid  after  the 
third  day  of  unemployment  two  marks  a  day 
for  the  first  twenty  days  and  one  mark  a  day 
thereafter  until  the  winter  season  shall  be  at  an 
end.  As  the  imperial  government's  laws  con- 
cerning insurance  against  illness  or  accident  pro- 
vide for  these  categories,  the  workman  can  only 
continue  to  receive  insurance  if  he  is  in  sound 
health  and  fit  for  work.  He  may  not  benefit  if 
he  is  on  strike  or  if  he  has  been  dismissed  through 
an  obvious  fault  of  his  own,  if  he  refuses  work 
or  has  given  false  information  regarding  himself. 
The  insurance  office  is  run  in  intimate  connec- 
tion with  the  official  labor  exchange,  whose  duty 
it  is  to  know  where  labor  is  wanted  in  any  divi- 
sion of  effort  in  the  Cologne  district  and  to  draw 
from  the  body  of  unemployed  enrolled  at  the 
exchange  those  suited  to  the  vacancies  that  exist. 
The  insured  are  largely  members  of  the  building 
trades,  such  as  masons,  stone-cutters,  plasterers, 
paperers,  and  carpenters.  The  results,  there- 
fore, are  not  regarded  as  representing  what  they 
would  be  were  the  insurance  to  extend  over  the 
entire  working  year  and  to  include  every  vari- 


78        MONARCHICAL  SOCIALISM 

ety  of  workers.  The  scheme,  however,  operated 
sufficiently  well  to  insure  its  continuance.  The 
plan  has  been  modified  in  details  from  year  to 
year,  and  has  become  adjusted  to  local  condi- 
tions. The  winter  of  1910  the  number  of  the  in- 
sured was  1,957.  Of  this  number  seventy-six 
per  cent  became  entitled  to  insurance  to  the  ex- 
tent of  61,934  marks.  The  insured  themselves 
had  contributed  23,439  marks.  The  remainder 
of  the  requirements  were  paid  out  of  the  perma- 
nent fund,  which,  with  the  exception  of  6,000 
marks,  was  restored  by  a  grant  of  20,000  marks 
from  the  city  of  Cologne  and  by  contributions 
from  other  bodies  and  persons. 

Private  persons  in  Leipsic  eight  years  ago 
founded  a  non-dividend-paying  company,  with  a 
reserve  of  100,000  marks,  with  the  object  of  insur- 
ing against  unemployment.  The  municipality 
declined  to  contribute  because  of  socialist  oppo- 
sition, based  upon  the  belief  that  insurance  enter- 
prises of  this  sort  tend  to  compete  with  similar 
provisions  of  the  trades-unions,  which  pay  out 
yearly  in  Germany  about  5,000,000  marks  on  ac- 
count of  intermittent  employment  of  their  mem- 
bers. The  trades-union  insurance  schemes  are 
usually  solvent  and  well  managed.  The  Leipsic 
concern  divides  its  risks  into  four  classes.  The 


UNEMPLOYMENT  INSURANCE     79 

members  pay  the  equivalent  weekly  of  seven  and 
one-half,  ten,  twelve  and  one-half,  and  fifteen 
cents  throughout  the  year,  the  insurance  under 
this  arrangement  covering  the  entire  year.  A 
special  class  has  also  been  erected  for  members 
of  societies,  or  for  entire  bodies  of  workmen  in 
factories,  to  be  insured.  The  member  is  quali- 
fied for  receiving  1.20  marks  insurance  per  day 
after  he  has  contributed  forty-two  weeks.  The 
usual  conditions  of  non-payment  in  case  of  strike 
or  refusal  to  accept  work  or  for  incapacity  for 
work  are  attached. 

The  conflict  with  the  trades-unions  has  been 
overcome  in  the  city  of  Strasburg  by  the  mu- 
nicipal government  co-operating  with  the  trades- 
unions,  and  adding  one  mark  per  day  to  the  sub- 
scription of  two  marks  for  each  member  made  by 
the  trades-unions;  or  in  instances  where  the  pay- 
ments of  the  trades-unions  were  less  than  two 
marks,  the  city  shares  proportionately.  This 
co-operation  has  been  found  to  work  well.  The 
city  insurance  office  settles  monthly  with  the 
trades-unions.  Only  one  instance  has  been  dis- 
covered of  deception  on  the  part  of  a  member 
of  a  trades-union  who  was  receiving  insurance. 
One  consequence  naturally  has  been  that  the 
position  of  the  trades-unions  has  been  strength- 


80         MONARCHICAL  SOCIALISM 

ened.  The  unorganized  labor  is  taken  care  of 
by  relief  works.  In  Strasburg,  as  well  as  in  other 
cities,  a  close  working  arrangement  exists  be- 
tween the  insurance  office  and  the  labor  ex- 
changes. The  co-operation  between  the  trades- 
unions  and  the  insurance  office  in  Strasburg 
has  had  the  advantage  of  providing  the  insur- 
ance office  with  accurate  information  regarding 
every  person  in  receipt  of  insurance,  and  a  system 
of  control  against  deception. 

The  municipality  of  Munich  has  a  bill  under 
consideration  for  paying  three  marks  a  day  for 
married  men  and  two  marks  a  day  for  unmarried, 
during  a  period  in  each  year  not  exceeding  eight 
weeks,  to  those  irregularly  employed.  The  mag- 
istrates decide  who  are  to  come  within  the  bene- 
fits of  the  municipal  insurance  fund,  which  is 
created  by  appropriation  from  the  city  treasury, 
by  contributions  from  employers,  and  by  the  sub- 
scriptions of  public-spirited  individuals.  Diissel- 
dorf  has  spent  during  each  of  three  winters  half  a 
million  marks  in  public  relief  works.  The  twenty 
or  more  other  German  cities  that  are  experiment- 
ing with  insurance  against  the  loss  of  work  are 
doing  so  upon  one  or  other  of  the  lines  already 
mentioned. 

The  subject  has,  however,  taken  a  larger  form 


UNEMPLOYMENT  INSURANCE     81 

in  German  thought  than  the  experiments  of  mu- 
nicipalities, though  these  experiments  form  an 
interesting  body  of  results.  The  broad  aim  to- 
ward which  German  statesmen  are  thinking  is  the 
building  of  a  governmental  machinery  that  shall 
bring  about  compulsory  thrift  on  the  part  of 
those  liable  to  unemployment,  and  the  compul- 
sory contribution  of  the  employer  of  labor,  with 
an  addition  by  society,  as  a  whole,  to  the  fund 
thus  created.  Employers  are  not  generally  op- 
posed to  such  a  law.  Several  of  the  great  em- 
ploying companies  of  Germany  have  private  sys- 
tems of  insurance:  as,  for  instance,  the  Lanz 
Machinery  Company  of  Mannheim,  which  has  a 
capital  set  apart  for  the  maintenance  of  skilled 
workmen  for  whom  the  company  has  provision- 
ally no  employment  on  account  of  industrial 
exigencies.  The  principle  upon  which  the  Lanz 
Company  and  other  companies  doing  the  same 
thing  act  is  that,  when  a  body  of  skilled  work- 
men has  been  brought  together  and  organized 
with  a  highly  specialized  division  of  labor,  the 
company  would  suffer  a  greater  loss  by  allowing 
the  workmen  who  form  trained  parts  of  their 
industrial  machine  to  migrate  to  other  places  in 
search  of  work  than  by  paying  to  keep  them 
ready  for  re-employment.  The  Lanz  Company 


82         MONARCHICAL  SOCIALISM 

also  considers  that,  as  it  employs  men  to  the  full 
capacity  of  the  works  only  during  brisk  times, 
it  is  simple  justice  to  give  these  workmen  a  share 
of  the  accumulated  profits  during  slack  times. 
German  companies  acting  thus  toward  their 
workmen  have  found  that  an  economy  was  ef- 
fected by  having  efficient  men  ready  to  fill  va- 
cancies or  to  take  up  work  during  periods  of 
expanding  business,  so  that  the  full  profits  of 
expansion  could  be  realized  immediately  without 
the  delays  that  might  otherwise  be  caused  by 
training  inexperienced  men  or  by  getting  trained 
men  from  other  localities — always  a  difficult 
thing  to  do  during  a  period  of  prosperity. 

The  Reichstag  in  1902  adopted  a  resolution 
asking  the  imperial  government  to  examine  into 
the  possibility  of  insurance  against  unemploy- 
ment. The  government  charged  the  imperial 
bureau  of  statistics  to  inquire  into  the  subject, 
and  after  three  years  an  extensive  report  was 
presented  to  parliament  based  upon  the  begin- 
nings of  the  experience  by  German  municipalities 
and  in  Switzerland  and  Belgium.  Although  this 
volume  was  published  only  seven  years  ago,  it  is 
out  of  date  because  insurance  for  unemployment 
has  made  such  rapid  progress  that  data  have, 
from  year  to  year  since  1906,  been  so  multiplied 


UNEMPLOYMENT  INSURANCE     83 

that  anything  written  one  year  has  become  anti- 
quated the  next.  Count  von  Posadowsky,  while 
he  was  imperial  minister  of  the  interior  and  vice- 
chancellor,  undertook  to  work  out  a  comprehen- 
sive plan  for  the  maintenance  of  those  able  to 
work  but  for  whom  no  work  could  be  found.  He 
gave  the  subject  much  personal  attention,  and 
the  statisticians  to  whom  he  committed  divisions 
of  the  work  brought  together  a  large  body  of  facts 
and  conclusions  based  upon  them.  The  mate- 
rial, however,  could  not  be  brought  into  a  form 
satisfactory  to  the  analytical  and  comprehensive 
mind  of  Count  von  Posadowsky.  He  never  sub- 
mitted the  results  to  the  chancellor  or  to  the  Em- 
peror. The  main  outlines  within  which  Count 
von  Posadowsky  undertook  to  enclose  his  scheme 
are  understood  to  have  been  compulsory  contri- 
butions by  workmen  during  the  periods  of  em- 
ployment, enforced  contributions  by  employers 
graduated  according  to  wages  and  the  character 
of  the  employment,  and  proportionate  contribu- 
tions from  the  imperial  finances.  A  considera- 
tion that  has  apparently  delayed  the  imperial 
government  in  pushing  forward  provisions  for 
the  idle  employable  has  been  the  position  of  the 
national  finances.  The  annual  deficits,  covered 
by  annual  borrowings  on  account  of  large  ex- 


84         MONARCHICAL  SOCIALISM 

penses  in  other  directions,  caused  the  feeling  that 
fresh  obligations  indefinitely  large  ought  not  to 
be  undertaken  until  the  imperial  expenditures 
were  balanced  by  revenue.  The  idea  of  an  in- 
surance against  unemployment  on  a  scale  co- 
terminous with  the  empire  is  for  the  present  in 
suspense,  but  it  is  likely  to  be  taken  up  as  soon 
as  financial  embarrassments  are  out  of  the  way. 
In  the  meantime,  the  problem  is  being  worked 
out  by  the  governments  of  German  states  and 
by  municipalities .  The  imperial  government  con- 
tinues to  take  censuses  of  unemployed  and  to 
make  theoretic  studies  with  the  ultimate  object 
of  devising  a  national  scheme. 

The  government  of  Bavaria  appointed  a  com- 
mission in  November,  1908,  to  discuss  public  in- 
surance against  results  of  loss  of  work.  The 
conference  met  the  following  March,  and  the 
principal  branches  of  industry,  agriculture,  the 
chambers  of  commerce,  and  the  departments  of 
the  government  were  represented.  The  proper- 
tied interests  were  sceptical  regarding  the  possi- 
bility of  an  equitable  distribution  of  the  burdens 
of  such  insurance,  while  economists  and  the  gov- 
ernment representatives  took  the  view  for  the 
most  part  that  insurance  of  this  sort  was  desir- 
able, and  that  the  difficulties  could  be  overcome. 


UNEMPLOYMENT  INSURANCE     85 

The  statistical  results  of  German  experiments 
form  already  a  literature  of  about  eighty  pam- 
phlets and  books  —  most  of  them  prepared  of- 
ficially by  city  statistical  offices,  or  by  economists 
and  statisticians  employed  by  municipalities  for 
the  purpose.  Nearly  all  the  material  is  accom- 
panied by  discussions  that  in  themselves  indicate 
how  new  the  subject  is.  Herr  Doktor  Jastrow, 
who  has  prepared  one  of  the  most  lucid  commen- 
taries for  the  city  council  of  Charlottenburg,  a 
suburb  of  Berlin  with  300,000  population,  con- 
siders that  the  discussion  has  advanced  far 
enough  for  it  to  be  regarded  as  non-political,  and 
that  the  question  need  not  longer  be  discussed  as 
it  was  some  years  ago  by  labelling  all  those  who 
hold  ancient  views  as  reactionaries,  and  those 
who  believe  in  such  insurance  as  radicals. 

The  main  preliminaries  which  have  been  de- 
cided by  municipalities  that  have  already  put 
into  operation  some  form  of  unemployment  in- 
surance, are  that  the  use  of  public  money  for 
this  purpose  is  admissible,  that  the  results  of 
unemployment  are  to  be  considered  in  principle 
as  a  public  matter,  and  that  it  is  technically  pos- 
sible to  provide  such  assurance. 

Insurance  is  based  upon  statistics  that  deter- 
mine the  frequency  with  which  a  risk  would  be 
likely  to  avail  itself  of  the  guarantee.  No  ade- 


86         MONARCHICAL  SOCIALISM 

quate  statistics  concerning  unemployment,  nor 
long-established  systems  for  premiums  and  in- 
demnities, exist.  It  has  been  affirmed  that  the 
need  for  insurance  might  depend  upon  the  in- 
sured person  himself,  and  that  the  employed 
workman  could  easily  cause  himself  to  be  dis- 
missed so  that  he  could  receive  money  without 
work.  The  objection  has  also  been  made  that 
in  other  forms  of  insurance  there  can  be  a  resto- 
ration of  the  damage  sustained,  and  that  the 
remedy  for  unemployment  ought  to  be  work  of- 
fered, instead  of  payments  for  not  working,  and 
that  the  question  would  still  be  open  as  to 
whether  the  insured  should  accept  work  that 
might  be  distasteful  to  him.  These  objections 
are  considered  to-day  as  having  been  disposed  of 
by  reflections  along  this  line: 

Modern  statistics  of  unemployment  are  imper- 
fect, but  life,  fire,  transport,  and  casualty  insur- 
ances were  begun  without  statistics,  and  cre- 
ated them  only  in  the  course  of  time.  Even  the 
imperfect  statistics  of  unemployment  to-day  are 
more  adequate  as  a  basis  from  which  to  work, 
Herr  Doktor  Jastrow  avers,  than  the  statistics 
were  at  the  time  of  organizing  most  of  the 
branches  of  existing  insurance.  The  objection 
that  the  beginning  of  the  benefits  of  insurance 
depends  upon  the  will  of  the  insured  person 


UNEMPLOYMENT  INSURANCE     87 

himself,  has  been  answered  by  pointing  out  that 
this  applies  likewise  to  liability  insurance,  where 
bad  faith  in  the  person  insured  is  possible. 

An  objection  more  often  raised  than  others  is 
that  of  unemployed  strikers.  This  has  been 
treated  by  separating  unemployed  strikers  from 
the  unemployed  from  other  causes.  In  some  dis- 
cussions of  this  phase  of  the  subject  it  is  con- 
sidered that  even  strikers,  when  an  arbitration 
court  organized  under  the  supervision  of  the  gov- 
ernment should  have  decided  that  the  strike  was 
a  just  one,  could  avail  themselves  of  the  insur- 
ance just  as  though  they  had  become  unem- 
ployed through  the  operation  of  involuntary 
causes.  This  phase  of  the  subject  indicates  the 
serious  obstacles  that  are  yet  in  the  way  of  a 
comprehensive  insurance  system  which  shall 
compulsorily  embrace  all  able  to  work,  yet  unem- 
ployed. The  losses  that  have  to  be  replaced  in 
every  kind  of  insurance  do  not  exist  as  an  effect 
of  detached  events,  but  are  a  permanent  condi- 
tion daily  created  under  the  workings  of  society 
and  daily  effaced,  with  intervals  of  greater  or  less 
severity. 

As  in  other  kinds  of  insurance,  it  is  economi- 
cally more  reasonable  to  prevent  losses  than  to 
pay  them.  Guarantees  against  unemployment 


88         MONARCHICAL  SOCIALISM 

tend,  it  is  observed,  to  render  communities  that 
are  paying  unemployment  insurance  at  present 
more  careful  of  the  rights  and  wrongs  of  the 
employer  and  of  the  employee,  to  stimulate 
measures  that  prevent  unemployment  just  as 
fire-insurance  companies  assist  in  the  organiz- 
ing of  fire  and  salvage  brigades  in  places  where 
they  do  not  exist  and  as  the  invalid-insurance 
department  of  the  government  spends  consider- 
able sums  for  the  care  of  tuberculous  patients  in 
order  to  prevent  the  spread  of  a  disease  that  will 
add  to  the  losses.  The  difference  between  insur- 
ance against  unemployment  and  other  branches 
of  insurance  is  that  the  policy  of  prevention  lies 
open  in  a  specially  high  degree.  New  questions 
of  dispute  have  arisen,  as,  for  example,  what  kind 
of  work  can  be  reasonably  provided  for  the  un- 
employed. Is  not  a  watchmaker  justified  in  re- 
fusing to  take  temporary  work  shovelling  snow, 
because  hard  manual  labor  will  thicken  the  cuti- 
cle of  his  hands  so  that  he  is  disabled  from  work- 
ing at  his  delicate  trade  should  he  have  an  op- 
portunity to  do  so?  Arbitration  courts  have 
been  organized  in  cities  experimenting  with  un- 
employment intrusted  with  the  decision  in  such 
cases,  and  their  verdicts  are  usually  recognized 
as  fair. 


VI 

GOOD-WILL  TOWARD  TRUSTS 

BARON  VON  RHEINBABEN,  lately 
Prussian  minister  of  finance,  announcing 
to  parliament  the  reorganization  of  the 
coal  syndicate,  said:  "To  my  great  delight,  I 
am  able  to  tell  you,  for  the  tranquillizing  of  our 
whole  industry,  that  the  coal  syndicate  has  been 
renewed."  The  Right,  the  Centre,  and  the  Left 
applauded,  the  Socialists  forming  the  extreme 
left  were  passive.  That  episode  has  in  it  much 
of  the  political  quality  of  the  present  position  of 
co-operative  capital  in  Germany,  the  good-will 
of  the  government,  the  approval  or  indifference 
of  the  parties.  The  calm  of  the  German  work- 
ing under  an  intense  centralization  of  financial 
power  appears  strange  to  the  American  ac- 
quainted with  the  agitations  and  fervors  of  pol- 
itics at  home.  An  outline  of  the  economic  uni- 
fication of  Germany  and  the  course  of  political 
thinking  that  sees  therein  few  dangers  to  the 
imperial  commonwealth  may  have  for  us  a  pe- 
culiar interest. 


90        MONARCHICAL  SOCIALISM 

The  Austro-Hungarian  Consulate-General  in 
Berlin,  reporting  to  the  Foreign  Office  in  Janu- 
ary, 1907,  on  the  industrial  situation  in  Ger- 
many at  the  close  of  the  preceding  year,  affirmed 
that  "economic  Germany  is  under  the  absolute 
rule  of  half  a  hundred  men."  The  report  de- 
velops this  observation,  and  avers  that  this  group 
decides  the  amount  of  production,  the  prices 
within  the  country,  prices  abroad,  the  terms  of 
credit,  the  rates  of  interest,  wages,  and  the  stip- 
ulations upon  which  capital  is  advanced  for  ex- 
tensions of  enterprise  an<J  the  founding  of  new 
companies.  These  are  strong  assertions,  but  I 
believe  that  most  persons  d>  ing  business  in  Ger- 
many or  with  Germans  are  convinced  that  the 
conclusions  of  the  Austrian  Consulate-General 
are  broadly  correct.  The  weight  of  high  finance 
in  industrial  combinations,  and  the  pressure  of 
these  combinations  upon  the  distributing  agen- 
cies, are  recognized  by  every  interest.  Non- 
conformity is  exceptional  and  rarely  profitable. 

Seven  Berlin  banks  form  the  core  of  the  sys- 
tem. They  have  shares  usually  amounting  to  a 
paramount  interest  in  about  forty  of  the  large 
provincial  banks,  and  these  in  turn  are  part 
owners  in  the  smaller  institutions  of  their  prov- 
inces, so  that  agreements  among  the  large  banks 


GOOD-WILL  TOWARD  TRUSTS     91 

in  Berlin  have  the  effect  of  decrees  upon  the 
twigs,  as  it  were,  of  the  financial  tree,  and  upon 
the  detached  undergrowth.  The  Deutsche  Bank, 
the  most  influential  of  the  Berlin  group,  has  a 
capital,  a  surplus,  and  deposits  amounting  to 
800,000,000  marks,  which,  with  the  resources 
of  its  provincial  tributaries  and  those  banks  or- 
ganized for  the  Asiatic,  African,  and  Latin  Amer- 
ican trade,  rises  to  about  1,750,000,000  marks. 
The  resources  of  the  Berlin  group  and  their  de- 
pendencies exceed  8,000,000,000  marks,  or  about 
$2,000,000,000.  These  details  appear  necessary 
to  an  understanding  of  the  economic  unification 
of  Germany,  for  it  is  through  the  fibres  of  the 
banking  net-work  that  centralization  is  accom- 
plished. 

German,  unlike  American,  banks  have  direct 
participation  in  industrial  enterprise.  The  bank 
that  gives  extensive  credit  to  a  manufacturing 
company  has  shares  in  the  company  and  a  rep- 
resentative on  the  board.  Thus  the  bank  has  a 
relation  to  production  that  simplifies  the  organi- 
zation of  syndicates  and  maintains  them,  be- 
cause the  banks  are  able  to  act  with  solidarity 
upon  and  with  the  promoters  of  industry. 
Writers  and  public  men  in  Germany  like  to  re- 
peat that  "trusts"  do  not  exist  in  their  country. 


92         MONARCHICAL  SOCIALISM 

Certain  enormous  businesses,  such  as  the  Allge- 
meine  Elektricitats-Gesellschaft  or  the  Krupp 
gun  and  armor  works,  in  their  monopolistic  char- 
acter, are  quietly  disregarded.  Production  and 
distribution,  however,  are  controlled  by  syndi- 
cates so  organized  that  the  policy  of  the  partici- 
pating business  is  made  over  to  the  executive  of 
the  syndicate,  thus  having  an  essential  character- 
istic of  trusts.  The  percentage  of  production  is 
allotted  by  the  directing  committee,  the  selling 
is  done  by  the  syndicate  alone,  and  the  syndicate 
board  is,  in  most  syndicates,  supplied  by  each 
member  in  advance  with  signed  checks  to  be 
filled  in  with  penalties  for  non-observance  of  the 
contract  obligations.  The  syndicate,  organized 
as  an  independent  company  with  which  the 
members  make  contracts,  may  be  compared  to 
the  American  holding  company,  and  in  this  form 
it  has  a  status  before  the  law  and  a  long  record 
of  legal  existence  dating  back  to  the  middle  of 
the  last  century.  The  means  for  binding  mem- 
bers indissolubly  to  the  central  organization  have 
been  perfected  to  a  degree  unknown  in  the 
United  States  or  in  England.  The  breakdown 
of  the  old  pooling  system  in  the  United  States 
was  chiefly  due  to  the  laxness  of  the  contracts, 
and  their  constant  violation  by  less  scrupulous 


GOOD-WILL  TOWARD  TRUSTS     93 

members.  The  trust  in  America  replaced  the 
pool.  In  Germany  any  disregard  of  the  syndi- 
cate contract  is  almost  certain  to  be  discovered 
and  penalized.  The  continued  disregard  of  syn- 
dicate contract  obligations  would  probably  bring 
about  the  financial  ruin  of  the  delinquent. 

The  experience  of  coal  proprietors  has  been  an 
enduring  argument  of  syndicate-makers.  The 
average  wholesale  price  of  bituminous  coal  in 
1893,  when  the  Rhenish- Westphalian  coal  syn- 
dicate was  formed,  was  $1.68  (seven  marks)  a 
ton  on  the  Essen  exchange.  The  following  year 
the  price  was  raised  twelve  cents,  and  it  remained 
at  $1.80  for  two  years.  In  1896  the  average  was 
$1.99;  in  1897,  $2.06^;  in  1899,  $2.18>£;  in 
1900-02,  $2.42>£.  The  price  was  then  low- 
ered on  account  of  the  industrial  crisis  in  Ger- 
many, and  coal  sold  at  $2.16  and  $2.23  during 
four  years.  In  1906  the  average  selling  price  of 
the  syndicate  was  advanced  to  $2.40,  in  1907  to 
$2.64,  in  1909  to  $2.86.  The  shares  of  important 
coal  companies  that  are  members  of  the  syndi- 
cate have  risen  since  1903  from  90  to  1000  per 
cent.  Gelsenkirchen,  for  instance,  has  risen 
from  127  to  370,  Consolidation  from  140  to  422, 
Nordstern  from  4*0  to  400,  at  which  price  it  was 
taken  over  by  the  Phoenix  in  1897.  The  shares 


94         MONARCHICAL  SOCIALISM 

(Cuxen)  of  the  Graf  Bismarck  mine  have  in- 
creased from  12,000  marks  in  1893  to  78,000 
marks  each,  Ewald  from  7,000  to  54,000,  Konig 
Ludwig  from  3,200  to  32,000.  The  quotations 
vary  somewhat  with  the  state  of  the  market. 
Those  given  are  representative  of  prices  from 
1905  to  1912. 

The  imperial  ministry  of  the  interior  classifies 
the  following  industries  as  controlled  by  syndi- 
cates: coal,  iron,  other  metal  industries  besides 
iron,  chemicals,  textiles,  leather  and  rubber 
wares,  timber,  paper,  glass,  tiles,  bricks,  pottery, 
foods  and  drinks,  and  electric  appliances.  Not 
all  the  works  in  a  single  line  belong  necessarily 
to  a  single  national  syndicate.  Often  there  are 
territorial  syndicates  which  have  agreements 
among  themselves.  The  whole  number  of  syn- 
dicates, as  recorded  by  the  ministry  of  the  in- 
terior, is  385. 

This  economic  unification  founded  upon  syn- 
dicates and  alliances  among  the  banking  powers 
is  not  a  completed  structure;  change  and  growth 
have  been  continuous  in  the  direction  of  co-or- 
dination, coercive  only  by  the  logic  of  dividends. 
As  will  presently  be  indicated,  the  imperial  gov- 
ernment has  now  taken  an  extraordinary  step 
in  the  direction  of  compelling  private  companies 


GOOD-WILL  TOWARD  TRUSTS     95 

to  form  a  syndicate.  The  imperial  government 
had  occasion  ten  years  ago,  after  a  discussion  in 
the  federal  council,  to  make  a  public  declaration 
of  neutrality  toward  combinations  restraining 
competition.  Count  von  Posadowsky-Wehner, 
imperial  vice-chancellor  and  minister  of  the  in- 
terior, said  in  the  Reichstag  on  November  14, 
1902: 

"The  syndicate  question  has  for  a  long  time 
had  such  an  important  place  in  the  economic 
life  that  the  imperial  administration  has  consid- 
ered it  a  duty  to  observe  the  movement  care- 
fully. For  the  present,  the  imperial  government 
takes  a  position  neither  for  nor  against  syndi- 
cates." 

Count  Posadowsky,  speaking  on  the  same  sub- 
ject in  parliament  a  few  days  later,  said : 

"Complaints  about  syndicates  have  become 
audible  since  the  high  tide  of  our  production  has 
been  reached.  On  one  hand  it  is  affirmed  that 
prices  within  the  country  are  too  high  to  enable 
home  industries  to  compete  with  foreign  indus- 
try in  the  world's  markets,  and  on  the  other  side 
that  the  syndicates  often  export  at  too  low 
prices  raw  materials  and  half -finished  goods,  to 
the  disadvantage  of  fully  manufactured  goods. 
The  government  has  nothing  to  say  at  this  time 


96         MONARCHICAL  SOCIALISM 

upon  these  complaints.  The  impression  is  that 
the  syndicates  have  been  often  deceived  in  their 
judgment  of  the  market  situation,  because  they 
are  not  in  close  enough  touch  with  their  cus- 
tomers. The  fact  is  that  the  effects  of  the  syn- 
dicates extend  far  beyond  the  direct  buyers  from 
syndicates  to  the  extreme  borders  of  our  eco- 
nomic life." 

Public  opinion  in  1902  and  1903  was  more  con- 
cerned over  the  powerful  development  of  indus- 
trial combinations  than  now,  and  the  influence 
of  the  agitation  in  America  was  felt  in  Germany. 
Parliament  requested  the  government  to  inquire 
into  the  question.  Count  Posadowsky,  as  min- 
ister of  the  interior,  directed  the  inquiry  and  laid 
the  results  before  parliament  in  four  volumes, 
which  report  fully  and  simply  an  immense  num- 
ber of  facts  about  the  syndicates,  their  organiza- 
tion, the  movement  of  prices,  their  relation  to 
their  members,  and  their  activities  in  the  foreign 
market.  The  spirit  throughout  the  report  is  one 
of  detachment.  The  government  acts  as  though 
it  were  a  disinterested  agent. 

Herr  Moeller,  Prussian  minister  of  commerce, 
said  in  the  Prussian  legislature  while  the  gov- 
ernment inquiry  was  in  progress:  "The  problems 
connected  with  syndicates  are  difficult  to  solve, 


GOOD-WILL  TOWARD  TRUSTS     97 

but  to  overthrow  syndicates  would  destroy  the 
ability  of  our  country  to  compete  abroad." 

The  state  and  the  imperial  governments, 
through  owning  immense  producing  properties, 
have  become  members  of  syndicates,  or  work 
with  them.  The  freight  rates  made  by  the  asso- 
ciated state  and  private  railway  companies  of 
Germany,  under  the  supervision  of  the  imperial 
federal  council,  make  a  distinction  between  the 
small  and  the  large  shipper,  thus  favoring  the 
syndicate  holding  companies.  The  Prussian  ad- 
ministration of  mines,  while  not  a  member  of 
the  coal  syndicate,  has  a  common  policy,  al- 
though it  is  not  friendly  to  the  syndicate  in  some 
ways.  The  Prussian  state  digs  25  per  cent  of 
the  Upper  Silesian  coal  output,  and  more  than 
one-half  of  that  from  the  Saarbruecken  fields, 
but  in  the  centre  of  the  coal-mining  industry, 
Westphalia,  Prussia  has  no  independent  owner- 
ship. Herr  Delbrueck,  now  imperial  minister  of 
the  interior,  then  Prussian  minister  of  commerce, 
said  in  the  Prussian  legislature,  November  26, 
1907: 

"I  am  asked  whether  we  can  prevent  the  coal 
syndicate  from  fixing  prices  arbitrarily.  I  pass 
over  the  question  as  to  how  far  the  syndicate 
has  gone  beyond  reasonable  limits  in  fixing  coal 


98         MONARCHICAL  SOCIALISM 

prices.  The  test  as  to  whether  prices  have  been 
fixed  according  to  economically  right  principles 
will  be  applied  in  the  event  of  a  further  decline 
in  industry.  We  are  not  in  a  position  now  to 
exert  influence  on  the  syndicate's  prices,  and 
such  influence  would  only  be  possible  under  gen- 
eral syndicate  legislation,  regarding  which  the 
necessary  investigations  have  not  yet  been  com- 
pleted." 

Herr  Moeller,  who  preceded  Herr  Delbrueck 
as  Prussian  minister  of  commerce,  said  in  the 
Prussian  house  of  lords  in  June,  1905,  in  advo- 
cating a  measure  to  ameliorate  the  conditions  of 
labor  in  the  mines : 

"The  reform  is  a  consequence  of  the  concen- 
tration of  capital  in  the  mining  industry.  I 
have  often  admitted  the  necessity  of  such  con- 
centration, and  opposed  anti-syndicate  laws,  but 
the  government  must  show  the  syndicates  that 
they  cannot,  in  the  public  interest,  go  beyond 
certain  limits;  and  such  a  transgression  by  the 
coal  syndicate  has  occurred.  The  syndicate  has 
taken  a  too  masterful  position  toward  the  jus- 
tifiable demands  of  the  working  people."  The 
bill  was  adopted. 

Professor  Gustav  Schmoller  would  give  the 
state  the  authority  to  appoint  one-fourth  of  the 


GOOD-WILL  TOWARD  TRUSTS     99 

directors  of  the  larger  syndicates  in  the  public 
interest.  He  has  also  suggested  that  one-half 
the  profits  beyond  a  certain  amount,  for  instance 
10  per  cent,  should  go  to  the  state. 

The  imperial  government  has  compelled  pot- 
ash-mine owners  to  avoid  merciless  competition 
among  themselves  by  forming  a  syndicate.  The 
governments  of  Anhalt,  Prussia,  and  the  imperial 
province  of  Alsace-Lorraine  had  for  many  years 
been  members  of  the  potash  syndicate.  It  was 
formed  in  1879  under  the  lead  of  the  Prussian 
Government,  with  the  government's  two  mines 
and  two  private  concerns.  With  the  opening  of 
fresh  mines  and  the  increased  market  for  the 
product  the  syndicate  was  from  time  to  time  en- 
larged. The  Prussian  fiscus,  the  board  having 
control  of  the  state  properties,  was  always  active 
in  the  formation  of  the  syndicate,  and  a  Prus- 
sian official  was  chairman.  The  syndicate  agree- 
ments expired  June  30,  1909,  and  could  not  be 
renewed  because  one  powerful  member  believed 
that  more  money  could  be  made  by  running  his 
mines  to  their  fullest  capacity,  extending  them, 
and  underselling  the  syndicate  in  the  American 
market,  the  largest  buyer.  Long-term  contracts 
were  made  by  the  insurgent  within  a  few  hours 
after  midnight,  June  30.  When  it  became  evi- 


100       MONARCHICAL  SOCIALISM 

dent  that  agreement  was  impossible,  the  Prus- 
sian cabinet  recommended  to  the  imperial  gov- 
ernment a  measure  establishing  a  compulsory 
syndicate.  The  bill  was  accepted  by  the  federal 
council,  and  submitted  to  parliament,  but  was 
withdrawn  because  of  a  protest  by  the  American 
government  on  the  ground  that  American  con- 
tracts were  unjustly  affected.  The  bill  was 
changed  in  terms,  but  not  in  effect,  and  adopted 
by  parliament.  The  act,  running  for  twenty 
years,  allots  to  each  of  sixty-five  mines  the  per- 
centage it  may  mine,  prices  are  subject  to  the 
federal  council,  should  wages  be  reduced  the 
mine's  percentage  of  output  is  correspondingly 
reduced,  and  minute  regulations  protect  the 
workman  in  hours  of  health  and  extra  compen- 
sation. The  statute  is  so  drawn  that  mine  pro- 
prietors, for  their  own  convenience  in  comply- 
ing with  the  requirements  of  the  law,  have  been 
obliged  to  reconstitute  the  syndicate. 

The  acceptance  by  parliament  of  the  principle 
that  the  state  has  the  right  of  compulsory  regu- 
lation of  private  production  may  have  a  pro- 
found effect  upon  the  future  in  Germany.  In 
the  potash  production  it  has  enabled  the  govern- 
ment to  exercise  the  vital  powers  that  it  would 
have  over  properties  were  they  owned  by  the 


GOOD-WILL  TOWARD  TRUSTS    101 

government  without  buying  them.  Parliament 
would  almost  certainly  have  refused  to  grant  the 
200,000,000  marks,  or  more,  which  would  have 
been  required  to  buy  the  mines.  The  mine-own- 
ers, owing  to  the  dissolution  of  their  syndicate 
and  the  impossibility  of  agreeing  among  them- 
selves, for  the  most  part  welcomed  interposition 
by  the  government.  Speakers  pointed  out  that 
if  the  government  could  erect  a  state  monopoly 
in  potash  while  the  properties  affected  remained 
in  private  ownership,  the  same  thing  could  be 
done  in  coal  or  iron  or  any  other  product.  The 
only  limitations  would  be  those  of  expediency. 
This  assertion  the  government  did  not  dispute. 
Ministers  stood  frankly  upon  the  position  that 
the  monopoly  designed  was  in  the  interest  of  the 
nation,  that  it  would  conserve  a  national  treas- 
ure, that  it  would  enable  German  agriculture  to 
obtain  fertilizers  at  a  moderate  price,  and  that 
it  would  enable  the  producers  to  make  a  large 
profit  out  of  the  foreign  buyers.  The  govern- 
ment did  not  controvert,  indeed  it  accepted  the 
idea  that  other  natural  products  might  also  be 
controlled  by  statutory  syndicates. 

The  creation  of  government  syndicates  is  a 
middle  course  between  private  combinations  of 
capital  and  government  ownership.  The  gov- 


102       MONARCHICAL  SOCIALISM 

eminent,  it  is  reasoned,  will  be  able  to  have  all 
the  advantages  of  state  ownership  without  in- 
vestment, and  without  taking  the  management 
of  individual  properties  out  of  the  experienced 
hands  of  their  owners.  Should  the  potash  syn- 
dicate work  according  to  the  expectations  of  its 
contrivers,  Germany  will  probably  have  a  suc- 
cession of  such  state  monopolies.  An  immense 
perspective  of  change  is  opened. 

Although  ministers  have  not  at  all  times  said 
the  same  thing  regarding  the  centralization  of 
industrial  capitals,  the  attitude  of  the  govern- 
ment of  the  empire  and  those  of  the  states  has 
been  friendly.  The  indications  are  rather  to- 
ward the  government-made  syndicate  than  to- 
ward legislative  checks  on  the  syndicates  as  now 
existing.  The  considerations  underlying  this 
position  toward  these  combinations  appear  to  be: 

First,  the  prevailing  official  political  economy, 
such  as  Wagner  and  Schmoller  teach,  that  pro- 
duction on  a  great  scale  must  inevitably  replace 
individual  company  production  just  as  factory 
production  took  the  place  of  cottage  industry. 
Therefore  the  most  efficient  and  economical  unit 
of  production  in  an  industry  is  likely,  in  some 
form,  to  be  coterminous  with  the  nation. 

Second,  the  syndicate,  after  supplying  the  in- 


GOOD-WILL  TOWARD  TRUSTS    103 

ternal  market,  is  able,  with  a  relatively  small 
additional  cost,  to  turn  out  a  surplus  for  the  for- 
eign market.  The  conviction  is  strong  in  Ger- 
many that  the  syndicates  have  been  important, 
sometimes  deciding,  factors  in  the  export  trade. 

Third,  the  syndicates  have  given  life  to  smaller 
enterprises  that  might  otherwise  have  been  ex- 
tinguished by  competition  without  quarter  or 
compromise.  The  syndicates  have  systema- 
tized and  steadied  production  and  distribution, 
so  that  alongside  the  syndicate  works  grew  the 
independent  works  until  strong  enough  to  be 
worthy  of  attention;  when  they  were,  they  were 
taken  into  the  circle.  The  potash  syndicate 
grew  from  the  four  mines  existing  in  1879  to  the 
sixty-five  forming  the  present  statutory  syndi- 
cate. The  law  provides  for  the  admission  of 
seven  other  mines  that  were  being  opened  at  the 
time  the  act  was  passed.1 

Fourth,  no  strong  party  seeks  to  restrain  the 
power  and  growth  of  syndicates.  The  imperial 
and  state  governments  have  been  mentioned  as 
apart  from  political  parties,  because  the  ministers 


1  Other  new  mines  after  five  years  may  participate  in  the  govern- 
ment allotments.  Hence,  at  the  end  of  1912  thirty-four  newly  opened 
mines  were  in  operation  and  waiting  for  a  full  share  in  the  profits. 
The  potash  business  shows,  therefore,  fresh  indications  of  depression. 
— AUTHOR. 


of  these  governments  are  responsible,  under  the 
German  system,  to  the  crown  alone,  and  not  to 
parliaments  or  diets.  In  theory,  and  also  largely 
in  practice,  the  imperial  and  Prussian  govern- 
ments are  above  and  independent  of  parties,  yet 
sensitive  to  public  and  party  opinion. 

One  would  suppose  that  the  Social-Democratic 
party,  with  4,250,329  l  votes  in  the  country,  would 
be  resolutely  and  implacably  opposed  to  the 
principle  of  trust  organization.  Quite  other- 
wise! The  Socialist  position  toward  "trusts, 
syndicates,  and  rings"  is  defined  in  a  resolution 
adopted  at  the  national  convention  of  the  party 
for  1904  in  Frankfort,  in  which  it  is  affirmed  that 
these  combinations  in  all  civilized  countries,  and 
especially  in  Germany,  are  the  natural  result  of 
capitalistic  production,  and  that  they  "hasten 
with  increasing  rapidity  to  their  culmination." 
The  purpose  of  associations  of  producers  is  de- 
clared to  be  the  regulation  of  production  and  the 
fixing  of  prices  so  that  the  profits  may  be  the 
highest  attainable.  "The  competing  middle  and 
small  producers  are  quickly  eliminated  as  a  nec- 
essary consequence  of  these  capitalistic  organ- 
izations," says  the  resolution.  "The  working 
classes  have  no  occasion  to  disturb  the  revolu- 

1  The  number  cast  at  the  Reichstag  elections,  January  12,  1912. 


GOOD-WILL  TOWARD  TRUSTS    105 

tionary  process  of  the  syndicate  system  through 
reactionary  legislative  attempts,  because  every 
progressive  step  in  the  centralization  of  capital 
whereby  the  interests  of  the  masses  are  separated 
from  the  interests  of  property  teaches  impres- 
sively and  visibly  the  irresistible  superiority  of 
nationally  and  internationally  organized  and 
centrally  directed  production  over  the  scattered 
production  of  free  competition.  This  develop- 
ment is,  therefore,  a  step  toward  the  realization 
of  socialism." 

The  resolution  avers,  however,  that  the  syndi- 
cate is  a  scourge  that  the  capitalists  use  upon  the 
workmen  to  depress  wages,  and  that  increasing 
social  and  political  servility  is  inevitable;  that  it 
is  a  necessity  for  the  working  classes,  if  they 
would  retain  their  manhood  and  self-preserva- 
tion, to  demand,  emphatically  and  categorically, 
legal  protection  against  any  curtailment  of  the 
right  of  organization,  and  especially  through  ef- 
fectual punishment  of  the  attacks  upon  labor  by 
the  employer.  The  Socialist  party,  therefore, 
conducts  a  continuous,  tenacious,  and  measur- 
ably successful  agitation  for  better  wages,  shorter 
hours,  and  healthier  factory  and  mine  conditions. 

During  the  discussion  the  speakers,  in  alluding 
to  the  campaign  against  trusts  in  the  United 


106       MONARCHICAL  SOCIALISM 

States  and  Canada,  regarded  the  anxieties  of  the 
"small  citizens"  as  exaggerated  and  as  destined 
to  be  transformed  into  regarding  the  trusts  as  a 
phase  in  the  progress  toward  collective  produc- 
tion. The  prevailing  view  was  that  the  syn- 
dicates are  restrained  from  fixing  prices  des- 
potically high  because  of  the  latent  power  of 
competition,  ready  at  any  time  to  produce 
when  an  artificial  condition  is  pushed  beyond 
moderate  limits. 

The  Socialist  party,  with  somewhat  more  than 
one-third  of  the  votes  cast  in  Germany,  draws 
within  its  organization  most  radicals.  The  at- 
titude of  the  Socialist  party,  therefore,  toward 
the  syndicate  and  trust  question  represents  the 
classes  and  the  thought  which  in  America  are 
most  active  in  the  agitation  against  combinations 
of  capital.  Journalists  are  numerous  among  the 
leaders  of  the  party.  The  men  who  in  other 
countries  are  sometimes  called  muckrakers  feel 
themselves  estopped  in  Germany  from  attacks 
on  capital,  except  in  the  orthodox  Socialistic 
way.  Since  the  Socialists  accept  trust  produc- 
tion as  an  inevitable  phenomenon  of  the  period, 
and  not  to  be  resisted  on  principle,  the  govern- 
ment is  relieved  of  criticism  from  that  source  of 
its  friendly  bearing  toward  the  syndicates. 


GOOD-WILL  TOWARD  TRUSTS    107 

By  odd  chance  the  Conservatives,  the  mon- 
eyed national  Liberals,  the  so-called  free-think- 
ing Radicals,  and  the  Socialists  hold  in  wide 
outline  the  same  convictions  regarding  the  legit- 
imacy of  syndicates.  The  landed  interests,  so 
powerful  politically,  are  committed  to  an  ap- 
proval of  the  syndicate  principle,  because  the 
great  land-owners  are  members  of  the  alcohol 
syndicate,  and  are  beneficiaries  of  the  sugar  com- 
bination. Land-owners  are  united  in  numerous 
associations  with  common  selling  agencies.  For 
instance,  the  sale  of  milk  in  Berlin  is  controlled 
by  a  land-owners'  association  that  adjusts  the 
prices  according  to  what  the  buyer  will  pay.  Be- 
sides, agriculture  is  so  highly  protected  that  the 
conservative  land-holding  interest  is  not  dis- 
posed to  complain  of  syndicate  manipulation  in 
non-agricultural  production. 

I  have  endeavored  to  show  that  the  attitude  of 
all  the  interests  —  agriculture,  finance,  mines, 
manufactures  —  is  united  upon  a  recognition  of 
the  syndicate  idea  as  a  necessary  principle  in 
production,  and  that  both  conservative  and  ex- 
treme radical  thinking  support  this  view.  It  is 
easy,  therefore,  for  the  government  to  be  well 
disposed  toward  the  plexus  of  monopolies  that 
penetrates  every  part  of  German  production  and 


108       MONARCHICAL  SOCIALISM 

distribution.  Under  such  favoring  political  con- 
ditions the  unifying  of  control  of  the  immense 
fabric  of  German  finance  and  industry  has  ad- 
vanced to  its  present  highly  centralized  position, 
so  that  it  has  been  called  "a  state  within  a  state." 


VII 

TAXING  THE   INCREASE   IN  LAND 
VALUES 

THE  imperial  German  Government  in  1909 
began  to  tax  the  increase  in  the  value  of 
land  and  went  further  in  that  direction 
in  1910.  The  percentage  taken  under  the  re- 
vised act  is  from  one-tenth  to  three-tenths  of  the 
increment.  One-half  goes  to  the  imperial  gov- 
ernment, 10  per  cent  to  the  states  for  collection, 
and  40  per  cent  to  the  municipalities  or  com- 
munes. Although  the  accounts  for  1912  have 
not  yet  been  closed,  it  is  estimated  that  the 
increase  in  land  values  will  amount  to  about 
$60,000,000  and  that  the  tax  will  be  about 
$9,000,000,  divided  according  to  the  foregoing 
percentages.  This  limited  application  of  the 
"single  tax"  illustrates  so  well  the  prevailing 
views  on  the  land  question  that  extracts  from 
the  memoranda  read  to  the  Reichstag  com- 
mittee, November  26,  1910,  by  Herr  von  Wer- 
muth,  the  imperial  minister  of  finance,  are  worth 
while: 

109 


"The  proposal  for  a  tax  on  the  increase  in  real- 
estate  values,"  said  he,  "emanated  from  the 
Conservative  party.  It  is  to  be  found  in  a 
motion  proposed  by  Herren  Dietrich,  Nehbel, 
Roesike,  and  Count  von  Schwerin-Loewitz,  on 
April  23, 1909.  It  subsequently  gained  the  warm- 
est appreciation  and  support  of  all  the  parlia- 
mentary groups.  I  shall  mention  the  efforts  in 
favor  of  it  by  Prince  von  Hatzfeld  and  Baron 
von  Gamp,  members  of  the  Conservative  party; 
Doktor  Weber,  Doktor  Paasche,  and  Herren  Sieg 
and  Fuhrmann,  of  the  National  Liberal  party; 
Doktor  Wiemer,  Doktor  Miiller-Meiningen,  and 
Herr  Momsen,  of  the  Radical  People's  party; 
Herren  Geyer  and  Stiicklen  and  Doktor  Stide- 
kum,  of  the  Social  Democrats;  Doktor  Spahn,  of 
the  Clerical  party;  and  Doktor  von  Skarzynski, 
of  the  Polish  group." 

The  minister  of  finance  had,  therefore,  the  sup- 
port of  every  party  in  parliament  for  the  tax. 
Herr  von  Wermuth,  reviewing  the  period  during 
which  the  bill  was  prepared,  said:  "We  sub- 
mitted it  to  outside  discussions  as  far  as  possible 
without  losing  sight  of  the  fact  that,  in  view  of 
the  strong  opposition  of  interests,  it  was  essential 
that  the  discussion  should  be  based  on  exact 
proposals.  .  .  .  We  entered  into  relations  with  a 


TAXING  LAND  VALUES          111 

large  number  of  persons  competent  to  form  an 
opinion.  We  have  consulted  bankers,  capital- 
ists, mine-owners,  merchants,  land-dealers,  land- 
lords, municipal  governments,  chambers  of  com- 
merce, professors,  agricultural  experts,  and  eco- 
nomic writers.  Many  of  them  had  objections, 
some  in  principle,  others  because  of  their  private 
interests.  Yet  in  process  of  discussion  many  of 
these  objections  were  modified  or  withdrawn. 
Thus,  real-estate  dealers  agreed  that,  as  the  ques- 
tion was  well  under  way,  all  they  desired  was 
that  it  should  be  settled  as  soon  as  possible,  be- 
cause delay  was  prejudicial  to  their  interests. 
I  met  numbers  of  persons  who  preferred  an  im- 
perial tax  to  one  laid  by  the  municipalities,  be- 
cause they  believed  that  the  imperial  tax  would 
not  cause  so  much  uncertainty  and  would  not 
be  assessed  arbitrarily.  The  government  has 
found  that  very  many  of  those  who  opposed  the 
tax  at  first  have  become  favorable  to  it.  My 
statements  are  not  merely  rhetorical.  I  stand 
ready  to  furnish  proofs  in  support  of  all  that  I 
have  said." 

The  finance  minister  had  made  a  personal 
study  of  the  real-estate  conditions  in  the  Berlin 
suburb  of  Reinickendorf ,  where  land  values  have 
gone  up  one-thousandfold  during  thirty  years. 


112       MONARCHICAL  SOCIALISM 

"In  Reinickendorf,"  said  Herr  von  Wermuth, 
"there  is  a  strong  antagonism  between  landlords 
who  have  built  on  their  properties  and  those 
who  have  not.  The  non-builders  protest  against 
the  tax  on  increased  values,  although  the  rate 
of  taxation  is  unusually  low  in  Reinickendorf. 
They  are  opposed  to  being  taxed  unless  the  land- 
lord is  receiving  a  cash  income.  They  wish  at 
the  same  time  to  abolish  the  tax  on  building  plots 
and  supply  the  deficits  in  municipal  revenues 
by  increasing  the  income-tax.  The  land-owners 
who  have  built  apartment  houses  on  their  lots 
protest  vehemently  against  any  such  reduction 
of  the  taxes  on  unimproved  property  because  it 
would  tend  to  raise  the  taxes  on  improved  prop- 
erty. We  have  here  two  examples  which  show 
where  the  interests  of  town  dwellers  lie." 

The  minister  of  finance  had  collected  the 
opinions  of  landed  proprietors  and  of  agricultural 
bodies.  One  such  opinion  from  Thuringia  he 
read:  "If  the  value  of  agricultural  land  increases 
because  it  is  close  to  a  town,  a  railway  line,  or  a 
canal,  the  enhanced  land  values  ought  to  be 
taxed  because  they  are  in  no  way  due  to  the 
efforts  of  the  owners.  Besides  that,  the  value  of 
lands  fluctuates  and,  owing  to  circumstances 
outside  the  control  of  the  owners,  the  values  in- 


TAXING  LAND  VALUES          113 

crease  abnormally.  ...  A  tax  on  increased 
values  will  therefore  check  abnormal  transac- 
tions." 

Herr  von  Wermuth  recited  the  growth  of  city 
populations  in  Germany  since  1871.  Hamburg 
had  increased  from  239,000  to  907,000,  Bremen 
from  82,000  to  240,000,  Stettin  from  76,000  to 
245,000,  Koenigsberg  from  112,000  to  243,000, 
and  Kiel  from  31,000  to  208,000.  All  of  these 
were  sea-coast  cities.  The  industrial  towns  had 
increased  in  even  greater  proportion.  Thus 
Diisseldorf  had  increased  since  1871  from  69,000 
to  358,000,  Dortmund  from  44,000  to  209,000, 
Essen  from  51,000  to  300,000.  The  land  val- 
ues had  increased  proportionately.  The  minister 
submitted  tables  going  into  much  detail,  show- 
ing the  prices  at  which  land  had  been  transferred 
within  thirty  years.  In  Berlin  values  had  in- 
creased from  500  to  1,000  per  cent,  depending  on 
the  location.  The  foreign  commerce  and  manu- 
factures had  undergone  a  development,  he  said, 
during  the  same  period,  which  had  caused  real 
estate  to  enhance  in  value.  The  progress  of  the 
whole  of  Germany  in  every  direction  had  been 
brought  about  to  a  considerable  degree  by  the 
measures  of  the  imperial  government.  The  im- 
perial government,  therefore,  was  entitled  to 


114       MONARCHICAL  SOCIALISM 

take  for  its  purposes  and  for  the  benefit  of  the 
whole  people  a  part  of  the  increase  in  value. 

The  committee  to  which  the  finance  minister 
read  his  memoranda  was  composed  of  the  leaders 
of  all  the  parties.  None  of  them  had  anything 
to  say  against  the  statement  of  facts  submitted 
by  the  minister.  This  seems  extraordinary,  be- 
cause half  a  dozen  of  the  members  were  provin- 
cial landed  proprietors  and  it  would  have  been 
supposed  that  they  would  not  have  consented 
under  any  circumstances  to  a  tax  being  laid 
on  the  increase  in  the  value  of  their  properties. 
They  did  so,  however,  for  two  reasons :  first,  that 
the  tax  would  be  much  heavier  on  city  proper- 
ties because  they  were  increasing  in  value  more 
rapidly;  and  second,  for  the  reason  that  agricult- 
ural lands  are  transferred  less  frequently  than 
city  property.  The  tax  is  reduced  by  one  per 
cent  for  each  year  that  has  elapsed  since  the  last 
transfer  of  the  land. 

The  remarks  of  the  finance  minister  on  this  sub- 
ject have  been  given  with  so  much  detail  because 
the  views  that  he  expressed  had  been  previously 
approved  by  the  imperial  chancellor,  Herr  von 
Bethmann-Hollweg,  by  various  other  ministers 
who  had  been  brought  into  the  preparatory  dis- 
cussions, and  finally  by  the  Emperor.  The  utter- 


TAXING  LAND  VALUES          115 

ances,  therefore,  of  Herr  von  Wermuth  are  much 
more  than  individual  opinions  and  represent  pe- 
culiarly the  ways  of  thinking  of  the  governing 
body  at  the  top  of  the  German  monarchical  sys- 
tem, faithfully  supported  also  by  the  aristocracy, 
and,  in  this  particular  land  measure,  as  we  have 
seen,  by  all  the  parliamentary  parties. 


VIII 

MONARCHICAL   VERSUS   RED 
SOCIALISM 

EMPEROR  WILLIAM,  democrat  and 
monarchist.  As  democrat  the  Emperor 
lives  intellectually  in  all  the  progressive 
thought  of  the  time,  striving  with  comprehensive 
plan  to  advance  the  German  in  mental  training, 
in  technical  efficiency,  in  physical  and  spiritual 
well-being.  He  welcomes  the  distribution  of 
wealth  and  ideas,  and  leads  in  the  crown  social- 
ism that  is  transforming  economic  Germany. 
As  monarchist  he  is  tenacious  of  prerogative, 
glorifying  the  services  of  the  Hohenzollerns  to 
Germany,  resisting  almost  immovably  those  who 
seek  to  share  what  is  his  by  hereditary  right, 
determined  to  pass  on  the  splendid  estate  un- 
impaired to  his  children.  The  statesmanship  of 
this  duplex  personality  conserves  therefore  ev- 
ery privilege  of  semi-autocracy  and  yet  uses  the 
forces  of  the  state  for  a  proportional  development 
of  the  whole.  The  monarchy  and  the  powers  of 
government  associated  with  it  have  advanced  in 

116 


MONARCHICAL  VS.  RED  SOCIALISM  117 

swiftly  succeeding  stages,  considering  the  life  of 
nations,  to  a  peculiar  aristocratic  socialism.  Po- 
litical power  remains  in  ancient  forms  and  yet 
takes  over  the  direction  of  modern  economic 
forces.  Monarchists  meet  the  deep  currents  of 
socialism  by  making  their  own  some  principles 
of  the  new  economy  and  retaining  resolutely  the 
entire  application  of  them.  An  extraordinary 
mental  and  political  civil  war  is  in  full  movement, 
in  which  monarchical  socialism  keeps  the  mas- 
tery of  material  development  against  republican 
revolutionary  socialism.  Although  monarchical 
socialism  is  in  possession,  the  vast  organized 
striving  of  another  class  socialism,  the  working- 
man's  socialism,  causes  conservatives  annoying 
apprehension. 

The  rise  of  socialism  as  a  political  force  in 
Germany  in  the  sixties  and  seventies  was  looked 
upon  by  Bismarck  as  tending  to  destroy  the 
monarchy,  the  church,  the  family,  and  the  very 
means  of  material  well-being.  He  advised  the 
crown  to  make  the  expression  of  socialistic  ideas 
a  crime.  The  anti-socialistic  laws  were  devised, 
fining  and  imprisoning  those  found  guilty  of  ap- 
proving socialism  as  taught  by  the  Social-Demo- 
cratic party.  They  were  enforced  relentlessly 
during  twelve  years,  with  the  complete  thorough- 


118      MONARCHICAL  SOCIALISM 

ness  of  a  strong  and  efficient  government.  They 
could  not  arrest  discussion  nor  reduce,  except 
temporarily,  the  socialist  vote.  The  vote  did 
fall  from  493,300  in  1877  to  437,600  in  1878,  and 
again  in  1881  to  312,000,  but  thereafter  the  vote 
rose  to  550,000  in  1884  and  to  763,000  in  1887. 
When  Bismarck,  in  1890,  the  last  year  of  his 
chancellorship,  asked  the  Reichstag  to  re-enact 
the  socialist  laws  and  make  them  a  permanent 
statute,  he  failed  to  convince  a  majority,  no 
doubt  because  it  was  privately  known  that  the 
present  Emperor,  who  had  in  the  meantime  come 
to  the  throne,  had  small  confidence  in  their  ef- 
fectiveness. 

Correlated  with  Bismarck's  legislation  repress- 
ing republican  collectivism  were  his  wide  schemes 
of  state  socialism  spreading  over  German  eco- 
nomic life.  By  these  he  sought  to  conciliate  the 
working  classes.  The  thought  and  sustained 
effort  that  Bismarck  gave  to  social  modification 
issued  directly  from  his  religious  and  monarchi- 
cal convictions.  "A  state,"  said  he,  "consisting 
for  the  most  part  of  Christians,  should  be  per- 
meated to  some  extent  by  the  principles  of  the 
religion  it  professes,  especially  in  regard  to  the 
help  one  gives  to  his  neighbor  and  sympathy 
with  the  lot  of  old  and  suffering  people."  "The 


MONARCHICAL  VS.  RED  SOCIALISM  119 

votes  given  to  a  socialist  candidate,"  said  he  on 
another  occasion,  "denote  the  number  of  persons 
who  are  discontented.  .  .  .  This  discontent  with 
one's  condition  is  natural  to  man.  The  desire 
to  improve  one's  position  —  to  get  on  —  is  a 
desire  that  God  has  implanted  in  man  and  those 
who  vote  for  the  socialists  do  so  in  the  hope  of 
bettering  themselves." 

Bismarck,  talking  long  afterward  to  W.  H. 
Dawson,  upon  the  origin  of  the  industrial  insur- 
ance laws,  said: 

"My  idea  was  to  bribe  the  working  classes,  or 
shall  I  say,  to  win  them  over,  to  regard  the  state 
as  a  social  institution  existing  for  their  sake  and 
interested  in  their  welfare." 

"It  is  not  moral,"  said  the  prince,  "to  make 
profits  out  of  human  misfortunes  and  suffering. 
Life-insurance,  accident  insurance,  and  sickness 
insurance  should  not  be  the  subjects  of  private 
speculation.  They  should  be  carried  on  by  the 
state  or  at  least  insurance  should  be  on  the 
mutual  principle  and  no  dividends  or  profits 
should  be  derived  by  private  persons."1 

Emperor  William  II  grew  up  in  the  midst  of 
political  thought  of  an  advanced  sort.  He  was 
taught  the  economic  philosophies  of  Wagner  and 

lDawson's  "Modern  Germany,"  vol.  II,  349. 


120       MONARCHICAL  SOCIALISM 

Schmoller,  state  socialistic  systems  purely.  Un- 
der William  I  and  Bismarck  the  Prussian  and 
the  imperial  governments  had  taken  the  first  far 
steps  in  the  direction  of  socialistic  changes.  Em- 
peror William  II  and  his  advisers,  living  in  the 
same  order  of  political  thinking,  have  continued, 
as  we  have  seen,  the  reaching  out  of  the  state  into 
fields  of  economic  effort  reserved  in  most  other 
modern  states  to  private  persons  and  companies. 
The  imperial  government  has  adopted  numerous 
measures  limiting  individual  control  in  private 
business,  the  most  interesting  of  which  to  the 
student  is  that  curious  law  of  1910,  mentioned  in 
Chapter  VI,  placing  potash-mining  under  the 
control  of  the  federal  council  which  fixes  prices 
and  the  proportion  of  foreign  and  home  sales. 

The  extraordinary  thing  about  this  is  the  util- 
ization by  the  monarchists  of  what  one  of  them 
has  called  "the  master  force  of  the  age"  to  main- 
tain old  sovereignties.  That  which  is  still  con- 
sidered destructive  socialism  in  some  countries 
is  appropriated  by  the  Crown  and  called  mon- 
archy in  Germany.  Every  collectivist  addition 
to  the  responsibilities  of  the  state  brings  a  new 
corps  of  employees  under  the  immediate  control 
of  the  functionaries  of  government.  The  mon- 
archy extends  its  power  over  the  individual 


MONARCHICAL  VS.  RED  SOCIALISM 

fortunes  of  its  subjects.  The  new  ascendency 
operates  both  economically  and  socially.  The 
employee  of  any  government-owned  undertaking 
feels  that  he  is  a  part  of  the  glittering  paramount 
social  institution  that  commands  the  world,  the 
world  as  it  is  known  to  him.  He  is  treated  by 
the  agents  of  this  remote  centralized  splendor 
with  mingled  severity  of  discipline  and  favor." 
The  certainty  of  employment  throughout  life,  if 
his  behavior  and  his  principles  are  sound,  a  pen- 
sion in  old  age,  a  differentiation  socially  from 
those  not  employed  by  the  state,  work  toward  his 
satisfaction  with  the  order  that  is.  He  is  prob- 
ably entitled  to  wear  a  uniform  and  after  an 
interval  of  years  his  sovereign  sends  him  a  medal 
of  honor. 

Society  and  wealth  are  interwoven  more  sol- 
idly with  the  government  in  Germany  than  in 
the  United  States,  or  in  England,  or  in  France. 
It  is  as  though  the  White  House  stood  at  the 
summit  of  exclusive  society,  not  only  of  New 
York  but  of  all  America,  and  by  means  of  social 
realities  had  a  predominant  influence  over  the 
wealth  and  rank  of  the  country.  In  such  a 
country  as  Germany,  social  position  is  the 
cement  that  holds  in  place  wealth,  talent,  and 
rank.  While  democratic  socialism  has  ceased  to 


MONARCHICAL  SOCIALISM 

be  a  felony  before  the  law  court,  it  has  become  a 
social  offence  without  commutation  of  sentence 
or  recognition  of  extenuating  circumstances.  No 
one  may  hold  any  position  in  the  public  service, 
not  even  that  of  a  section  hand  on  a  railway, 
and  admit  that  he  is  a  socialist,  nor  may  he  teach 
in  any  school  or  university.  The  "color  line" 
that  places  the  member  of  the  Social-Democratic 
party  below  caste  is  also  a  force  that  simplifies 
leadership  above.  Aristocratic  socialism,  when 
the  initiative  is  with  the  sovereign,  draws  easily 
with  it  the  nobility,  the  great  industrialists,  and 
all  lesser  gradations  of  position  and  wealth,  even 
to  the  "white-collar  proletariat,"  as  red  socialists 
call  clerks  and  office  employees.  Only  two  or 
three  times  in  forty  years  have  the  Conservatives 
departed  from  their  principle  of  steady  unques- 
tioned support  of  crown  policies,  socialistic  or 
otherwise.  In  1873  they  gave  only  partial  ap- 
proval to  certain  tax  proposals  in  Prussia,  and 
in  1909  they  refused  to  concur  in  Prince  Billow's 
inheritance  taxes.  They  joined  in  the  criticism 
uttered  in  the  Reichstag  in  November,  1908, 
against  the  Emperor's  having  talked  freely  in 
England  in  private  conversation  about  German 
foreign  affairs  and  the  anti-English  feeling  of  a 
majority  of  his  people. 


MONARCHICAL  VS.  RED  SOCIALISM  123 

Over  against  respectability  finely  and  tradi- 
tionally organized  with  the  church  both  Prot- 
estant and  Catholic,  the  schools  and  universi- 
ties, much  of  the  press,  and  that  wonderful  body 
of  men  that  leads  militant  industry  and  enter- 
prise, stands  implacable  workingmen's  socialism. 
This  theoretic  collectivism  is  a  philosophy,  or  a 
religion,  or  a  political  platform,  or  a  materialistic 
hope  of  the  four  millions  and  a  quarter  of  Ger- 
man men  who  supported  the  candidates  of  the 
Social-Democratic  party  at  the  last  general  par- 
liamentary elections  in  January,  1912,  and  re- 
turned 110  members  out  of  a  total  of  397.1 

Doctrinaire  socialism  is  subtle  enough  and 
comprehensive  enough  to  give  its  followers  ade- 
quate mental  footing.  In  a  monarchist  and  aris- 
tocratic country  the  principles  of  socialism  have 
behind  them  the  emotional  forces  that  have  won 
the  long  battles  for  political  liberty  in  England 
and  by  inheritance  in  the  United  States.  Free- 
thinkers find  in  it  a  new  theology,  and  as  a  pro- 
jected system  of  government  and  political  econ- 
omy it  engages  the  hopes  and  the  imaginations 
of  those  who  see  the  failures  and  limitations  of 
the  things  that  are.  I  know  nothing  like  Ger- 
man socialism  in  the  politics  of  other  countries, 

1  The  precise  vote  was  4,250,329  out  of  a  total  of  12,206,808. 


124       MONARCHICAL  SOCIALISM 

for  the  grip  it  has  on  the  thoughts  and  emotions 
of  the  men  and  the  women  who  have  equal 
rights  within  the  party.  The  party  organiza- 
tion is  quite  extraordinary,  extraordinary  for 
immediate  results  in  the  campaign  and  more  for 
the  long  look  ahead.  The  mothers  and  fathers 
are  persuaded  that,  while  material  ease  and 
happy  social  conditions  will  most  likely  never 
be  theirs,  their  children  may  win  them  if  they 
know  how  to  take  hold  of  the  levers  that  the  so- 
cialist party  offers  to  their  hands.  Therefore, 
the  child  must  learn  the  meaning  of  socialism 
and  all  that  it  may  do  for  himself  and  his  class. 
Socialist  mothers  undertake  to  put  their  children 
on  the  path.  Numerous  little  stories  and  ro- 
mances with  a  socialist  moral  are  in  circulation 
for  young  people,  and  the  socialist  lecturer  with 
magic  lantern  entertains  and  informs.  Dra- 
matic and  operatic  performances,  with  socialist 
motive,  are  given  in  all  cities  of  importance. 
Pictures,  texts,  and  mottoes  with  the  party  thrill 
in  them  are  on  the  walls  of  half  a  million  dwell- 
ings. The  party  owns  seventy-six  daily  news- 
papers, a  press  association,  several  illustrated 
periodicals,  and  fifty-seven  publishing  houses. 
The  literature,  including  a  considerable  range 
of  excellent  non-socialistic  books,  is  immense. 


MONARCHICAL  VS.  RED  SOCIALISM  125 

The  party  has  two  hundred  central  circulating 
libraries  and  three  hundred  and  seventy-seven 
branches.  The  management  of  the  party  acts 
upon  the  principle  that  all  stimulating  scientific, 
poetic,  philosophic,  and  romantic  literature  ad- 
vances the  cause.  A  variety  of  special  books, 
designed  to  detract  from  the  reverence  and  re- 
spect for  the  Emperor  taught  in  the  schools,  are 
circulated.  They  are  written  boldly,  yet  with 
caution  sufficient  to  keep  them  within  the  laws 
against  lese  majeste  and  sedition.  The  party  is 
heavily  officered  by  writers  and  speakers,  some 
of  whom  make  it  a  kind  of  game  to  shoot  their 
arrows  as  near  the  royal  reputation  as  they  may 
and  still  escape  prison.  The  "muckraker"  is 
numerous  and  active  in  Germany  and  assails  the 
high  by  witticism,  cartoon,  cool  analysis,  and 
passion-wrought  phrase. 

The  party  maintains  an  academy  at  Berlin  for 
instructing  the  paid  provincial  secretaries  and 
organizers  on  the  intellectual  bases  of  socialism. 
National  economy,  as  examined  in  the  light  of 
socialistic  dogmas,  is  taught  there,  the  history 
of  socialism,  the  history  of  the  development  of 
society,  the  history  of  Germany,  the  arts  of  ex- 
pression in  speaking  and  writing,  practical  jour- 
nalism, the  rights  of  working  people  under  the 


126       MONARCHICAL  SOCIALISM 

law,  and  the  legal  boundaries  of  agitation. 
The  party  has  something  of  the  unity  of  the 
Catholic  Church.  All  agitators  say  the  same 
thing. 

Of  the  forces  that  work  for  republican  col- 
lectivism in  Germany,  the  one  most  powerful, 
slow-moving,  and  enduring  is  class  conscious- 
ness. Trades-unions  have  been  developing  group 
consciousness  during  three  generations.  The  so- 
cialist would  extend  this  consciousness  to  the 
mass,  choosing  as  the  limit  of  his  sympathies  a 
level  about  one-quarter  below  the  apex.  Beyond 
that  stratum  he  would  have  his  class  regard 
mankind  as  dehumanized,  thus  transposing  the 
formula  of  the  Austrian  archduke  who  said  that 
"Humanity  begins  with  the  count."  Socialist 
leadership,  through  local  organization  in  which 
good  will  and  equal  individual  rights  decide 
things,  does  succeed  in  making  the  hand-worker 
feel  that  he  is  not  alone  as  against  the  official,  the 
employer,  the  land-owner,  the  noble,  the  mag- 
istrate, or  any  one  who  somehow,  either  by  in- 
heritance, personal  dexterity,  or  accident,  as  he 
may  think,  has  a  position  above  him.  This  put- 
ting of  class  against  class  is  stimulated  by  the 
easy  habitual  superiority  of  the  quarter  at  the 
top.  The  school-master's  sharpness,  the  caste 


MONARCHICAL  VS.  RED  SOCIALISM  127 

spirit  of  the  whole  body  of  permanent  civil  ser- 
vants, even  that  of  the  clerk  in  the  post-office, 
the  somewhat  harsh  discipline  in  the  army,  the 
system  of  manners  and  class  etiquette,  and  the 
remoteness  of  one  social  division  from  another 
give  the  daily  incitement  to  class  unity  below, 
organizing  around  convictions  of  what  appears 
to  be  economic  and  political  right.  As  the 
numbers  and  strength  of  the  organization  in- 
crease —  and  they  do  increase  with  a  regular- 
ity that  seems  almost  like  the  operations  of  a 
natural  law  —  the  workers  without  are  made  to 
feel  that  by  non-participation  they  are  betraying 
their  own  people.  The  zeal  of  partisans  during 
election  time  leads  to  instances  of  terrorism 
against  the  fro  ward.  This  flourishing  class  con- 
sciousness is  the  subtlest  adversary  of  the  exist- 
ing order. 

Aristocratic  socialism  and  its  works,  far  as 
they  go  when  observed  from  more  individual- 
istic countries,  are  rejected  by  thorough-going 
collectivism  as  trifling  with  a  great  cause.  The 
Emperor  and  his  advisers  of  the  state  socialistic 
school  are  looked  upon  as  having  harnessed  a 
wonderful  verity  to  the  service  of  monarchy  and 
of  a  modified  individualism.  Imperial  socialism 
is  regarded  as  vitalizing  sick  and  fading  institu- 


128       MONARCHICAL  SOCIALISM 

tions,  as  hindering  the  passing  of  economic  and 
political  forms  that  have  been  essential  to  prog- 
ress but  are  ceasing  to  be  so.  Governmental  so- 
cialism replies  that  class  socialism  from  below  is  a 
monster  of  teeth  and  claws,  without  a  brain, 
tearing  at  the  national  life,  that  the  driving  emo- 
tions are  hatred,  covetousness,  envy,  and  silly 
destructiveness. 

Monarchical  socialism,  for  all  the  fervor  of  the 
republican  collectivists  and  their  numbers,  occu- 
pies positions  of  commanding  strength.  The  agi- 
tations of  the  Social-Democratic  party,  the  possi- 
bilities of  real  danger  in  the  movement,  brace  the 
monarchists  to  efficiency  and  prudence  in  ad- 
ministration. Hostile  criticism  searches  out  the 
weak  places  in  the  system  and  they  are  repaired 
by  the  government.  The  constant  effort  is  to 
make  the  monarchy  with  large  powers  a  rational 
and  ethical  general  manager  of  a  joint-stock  com- 
pany. Mere  numbers  do  not  appear  to  count 
against  trained  talent,  placed  so  abundantly  at 
the  disposition  of  the  government,  especially  when 
talent  takes  care  to  act  upon  standard  principles. 
Were  the  large  officer  class  indolent  and  self-in- 
dulgent instead  of  being  kept  working  up  to  the 
edge  of  nervous  strain,  or  were  the  permanent 
civil  servants  lax  concerning  public  money  and 


MONARCHICAL  VS.  RED  SOCIALISM 

incapable,  or  were  ambitious  devotion  to  the 
Crown  working  hap-hazard  and  not  according 
to  plan,  the  tide  from  below  might  submerge 
them.  More  than  all,  the  prosperity  of  Germany, 
while  it  has  demonstrated  that  the  rich  are  get- 
ting richer,  has  not  demonstrated  that  the  poor 
are  getting  poorer.  The  prosperity  of  the  coun- 
try and  the  arrangements  of  the  state  for  allow- 
ing the  mass  of  workers  below  to  share  somewhat 
in  it,  have  lifted  the  whole  people,  except  that 
sad  thin  stratum  of  the  defective  and  inefficient 
at  the  bottom.  The  aristocratic  government  has 
for  the  present  a  grasp  of  the  representative  sys- 
tem which  will  be  hard  to  loosen.  The  terri- 
torial outlines  of  the  imperial  parliamentary  dis- 
tricts have  not  been  changed  since  the  empire 
was  founded.  Population  relatively  has  shifted 
from  the  country  to  the  cities.  The  cities  and 
the  industrial  municipalities  are  precisely  where 
workingmen's  socialism  is  strong.  Old  tradi- 
tions have  kept  their  hold  on  the  rural  communi- 
ties. Hence  a  farm  hand's  vote  has  three  times 
the  elective  value  of  the  factory  operative's.  A 
great  city,  such  as  Berlin,  returns  six  members, 
five  of  them  Social  Democrats,  while  according 
to  population  the  capital  should  have  sixteen 
seats.  Some  industrial  districts,  which  meas- 


130       MONARCHICAL  SOCIALISM 

ured  by  numbers  should  have  four  members,  now 
have  but  one.  In  several  country  districts  mem- 
bers are  returned  who  have  only  received  one- 
twelfth  as  many  votes  as  those  necessary  to  elect 
a  member  in  Berlin.  Therefore,  the  nominal 
constitutional  equality  of  individuals  does  not 
exist.  In  the  state  legislatures  the  influence  of 
property  is  strangely  beyond  the  ratio  in  any 
other  modern  country.  Thus  in  Prussia,  with  a 
population  of  41,000,000  out  of  the  total  65,000,- 
000,  the  three-class  property  franchise  gives 
fifteen  per  cent  of  the  voters  two-thirds  of  the 
electoral  power.  These  inequalities,  although 
the  subject  of  fierce  agitation,  are  clung  to  with 
unshaken  tenacity.  Such  inequalities  must,  of 
course,  yield  in  the  end,  although  in  Prussia  the 
end  is  likely  to  be  long  delayed.  The  middle 
classes,  quite  as  much  as  landed  squiredom, 
refuse  equality  of  ballot  to  those  in  the  third 
or  small-property  class.  Collective-ownership 
economists,  affirming  that  their  theory  of  indus- 
trial organization  becomes  yearly  more  necessary 
to  the  nation,  urge  patience.  No  violence,  no 
threats,  but  steady  appeal  to  the  reason  and 
self-interest  of  the  mass.  The  results,  as  marked 
at  the  Reichstag  elections  during  forty  years, 
have  been: 


MONARCHICAL  VS.  RED  SOCIALISM  131 


1871 124,700 

1874 352,000 

1877 493,300 

1878 437,600 

1881 312,000 

1884 550,000 

1887 763,000 


1890 1,427,000 

1893 1,789,700 

1898 1,107,100 

1903 3,010,800 

1907 3,259,000 

1912 4,250,329 


These  impressive  figures  change  their  char- 
acter somewhat  upon  examination.  The  Social- 
Democratic  programme  is  a  wide  one  and  at- 
tracts a  secret  ballot  from  many  a  man  of  con- 
victions on  subjects  unrelated  to  the  ownership 
of  the  "instruments  of  production."  The  Social 
Democrat  would  make  religion  a  private  matter 
by  separating  church  and  state,  thus  depriving 
the  Lutheran,  the  Catholic,  and  the  Jewish 
churches  of  their  proportionate  share  of  taxes 
collected  for  religion.  He  would  stop  increasing 
the  army  and  navy,  give  the  ballot  to  all  women 
twenty  years  old,  secure  to  communities  local 
self-government,  provide  free  instruction  in  the 
higher  schools,  and  require  the  yearly  assessment 
of  taxes  by  representative  assemblies  instead  of 
having  large  categories  of  taxes  run  permanently 
without  annual  examination.  The  great  enter- 
prises of  government,  such  as  railway  ownership, 
have  no  sure  check  on  the  votes  of  employees. 
They  may  wear  the  uniform  and  yet  hold  hereti- 


132       MONARCHICAL  SOCIALISM 

cal  opinions  privately,  expressing  them  only  by 
ballot. 

Social  Democrats  in  thought  like  to  elevate 
their  movement  above  national  boundaries  and 
feel  that  they  have  hold  of  principles  that  will 
transform  the  life  of  the  world.  Every  success  in 
Germany  is  regarded  as  having  an  influence 
throughout  Europe  and  America.  The  ruling 
Committee  of  Seven  gave  a  subsidy  of  ten  thou- 
sand marks  to  the  principal  socialist  newspaper 
in  New  York  last  year  and  ten  thousand  francs 
to  a  newspaper  undertaking  in  Spain.  German 
socialists  are  strongly  committed  to  agitation  in 
Russia,  and  give  help  freely  to  the  Scandinavian 
brotherhoods.1 

From  what  has  been  written  here,  it  might  be 
supposed  that  the  two  schools  of  socialism  — 
monarchical  and  republican  —  divide  German 
political  thought  between  them.  That  would  not 
be  a  complete  generalization.  An  important 
body  of  opinion,  especially  among  the  command- 
ers of  industry,  holds  to  the  old  individualism 
and  gives  assent  to  government  ownership  or 
control  either  as  a  forced  compromise  or  as 
reasonable  only  in  national  undertakings  such 
as  transportation  or  forestry.  It  would  seem 

1  See  Appendix  B  for  the  Social-Democratic  party's  full  programme. 


MONARCHICAL  VS.  RED  SOCIALISM   133 

as  though  these  influential  individualists  are 
obliged  to  form  a  following  acting  with  the  conser- 
vative parties,  without  being  strong  enough  to 
decide  policies.  The  great  manufacturers,  so 
powerful  in  England  and  the  United  States,  are 
singularly  weak  politically  in  Germany.  In  the 
Reichstag  and  the  state  diets  they  are  always  in 
an  inferior  position  to  the  landed  Conservative 
and  to  the  Catholic  parties.  As  a  political  in- 
fluence they  are  only  mildly  articulate. 

From  action  and  recoil,  economic  adventure 
and  class  compromise,  German  institutions  are 
being  changed  strangely.  Thus  far  the  efficiency 
and  the  gathering  momentum  of  the  national  life 
do  not  appear  to  have  been  weakened.  German 
thought,  research,  and  discovery  are  studied  at- 
tentively in  foreign  laboratories,  universities,  and 
workshops.  German  enterprise  is  met  in  every 
market.  In  European  politics  and  diplomacy 
the  German  shadow  falls  across  the  aspirations 
of  great  neighbors  who  do  not  feel  free  to  act 
without  consultation  and  combination.  The 
observer  from  another  continent,  whatever  his 
angle  of  observation,  may  allow  another  genera- 
tion or  two  to  pile  up  results  before  trying  to 
forge  a  sure  judgment.  The  German  cannot 
wait.  He  is  deep  in  the  battle  of  ideas  and  is 


134       MONARCHICAL  SOCIALISM 

forced  to  conclusion  because  he  must  choose  a 
side  and  act.  He  cannot  avoid  the  urgencies 
and  possibly  the  terrors  of  his  progress. 


IX 
LOOKING  TOWARD  THE  FUTURE 

THE  foregoing  chapters  sketch  some  atti- 
tudes of  the  monarchy  toward  specific 
social  problems  and  outline  some  govern- 
mental forms  in  the  making,  which,  although 
unfinished,  already  penetrate  to  the  foundations 
of  German  economic  life.  These  institutions 
and  others  like  them  now  germinating  before 
our  eyes  pre-existed  hi  the  thoughts  of  cer- 
tain professors  and  writing  men.  Statesmen,  in- 
cluding sovereigns  and  subjects,  took  over  the 
ideas  and  wrought  applications  of  them  by  de- 
cree, statute,  and  administrative  act.  Thus  ini- 
tiated, watched,  and  tended  by  ministers  and 
convinced  bureaucrats,  constructions  that  seemed 
cold  and  rigid  changed  into  living,  growing  insti- 
tutions. The  observer  seeing  them  arise,  noting 
the  direction  in  which  they  develop,  would  like 
to  complete  them  mentally,  add  to  them  and 
form  conceptions  of  the  German  national  life 
as  it  may  become  in  decades  beyond  this  one. 
Seeing  that  the  statesmanship  of  the  crown  and 

its  advisers  had  expression  first  in  books  and 

135 


136       MONARCHICAL  SOCIALISM 

pamphlets,  one  may  look  into  them  for  a  fuller 
idea  of  what  may  conceivably  be  done  in  these 
coming  decades. 

The  master  economic  thinkers  within  the  view 
of  ruling  statesmanship  in  Germany  are  Adolph 
Wagner  and  Gustav  Schmoller.  They  have 
lived  to  see  their  ideas  built  into  the  German 
state  and  imperial  system  by  the  old  Emperor 
and  Bismarck  and  by  the  present  Emperor  and 
his  line  of  chancellors.  They  abandoned  the  no- 
tion that  political  economy  has  any  finality  in  it 
or  that  it  is  to  be  studied  with  any  expectation 
of  discerning  and  laying  down  absolute  princi- 
ples. The  economist  may  observe  the  facts  of 
social  and  economic  life  as  they  are  spread  out 
before  him,  note  the  inefficiencies,  the  waste  of 
effort,  the  inadequacy  of  means  to  ends,  and, 
more  than  all,  the  non-ethical  tendencies  that 
distort  and  weaken  the  state  and  therefore  every 
individual  in  it.  Institutions  are  to  be  judged 
by  their  benefit  to  the  greatest  number.  The 
government  can  bring  this  about  for  the  com- 
munity only  by  taking  interest  directly  in  the 
social  and  economic  arrangements,  and  by  lim- 
iting the  freedom  of  individuals  and  groups 
should  their  activities  appear  upon  examination 
not  to  serve  the  general  aims  of  the  organized 


LOOKING  TOWARD  THE  FUTURE     137 

life.  Finer  individuals,  ethically  and  intellectu- 
ally, are  likely  to  be  evolved  according  to  this 
conception,  individuals  with  freedom  to  rise 
spiritually  and  mentally  because  they  have  par- 
tial economic  liberty.  This  freedom  may  in- 
crease with  the  achievements  of  the  nation  in 
co-operation,  invention,  and  the  mutual  good- 
will of  classes. 

Wagner,  Schmoller,  Schoenberg,  Schaeffle,  and 
others,  originating  and  supporting  principles  of 
monarchical  socialism,  took  the  middle  course 
between  the  extreme  socialism  of  Lassalle,  Marx, 
and  Rodbertus,  which  would  have  a  democratic 
government  do  everything,  and  the  individual- 
ism of  the  Manchester  school,  limiting  the  pow- 
ers of  government  to  the  simplest  functions  of 
administration  and  defence.  The  endeavor  of 
German  statesmanship  has  been  to  hold  to  ev- 
erything in  existing  social  arrangements  neces- 
sary to  produce  individuality  in  the  higher  or- 
ders, and  yet  to  intervene  in  education,  sanita- 
tion, sick,  accident  and  old-age  insurance,  the 
physical  training  of  youth  in  the  army,  and  to 
participate  in  transportation,  forestry,  mining, 
farming,  and  industrial  enterprises,  designing 
thus  to  raise  the  lower  orders  mentally,  physi- 
cally, and  economically,  so  that  they  too  become 


138       MONARCHICAL  SOCIALISM 

worthier  individuals,  adding  to  the  power  of  the 
state  and  the  monarchy.  The  intervention  of 
the  government  is  to  be  determined  by  expedi- 
ency. The  government,  guided  by  circumstances, 
is  ready  either  to  take  part  in  phases  of  economic 
life  or  to  let  individualism  remain  in  control  of 
them.  As  Wagner  is  the  pre-eminent  thinker 
in  this  sort  of  socialism,  one  may  look  into  what 
he  has  written  to  see  what  he  counsels  for  the 
future.  Although  the  writer  has  read  a  good 
deal  of  Wagner's  abundant  writings,  he  cannot 
summarize  this  constructive  economist's  views 
better  than  W.  H.  Dawson  did  twenty-three 
years  ago:1 

"He  [Wagner]  laments  and  condemns  the  ex- 
isting *  moral  indifferentism  in  the  domain  of 
economic  dealings.'  It  is  not  enough  to  talk  of 
buying  and  selling  labor,  and  to  give  and  receive 
money  for  labor  as  its  price;  we  must  remember 
that  the  relation  of  employer  and  employed,  the 
producer  and  consumer,  is  that  of  man  to  man. 
To  him  the  idea  of  'regarding  labor  power  as  a 
commodity  and  wages  as  its  price  is  not  only 
unchristian,  but  is  inhuman  in  the  worst  sense 
of  the  word.'  He  says  plainly  that  the  object 
he  has  in  view  is  to  give  the  working  classes  a 

1  "Bismarck  and  State  Socialism,"  1891. 


LOOKING  TOWARD  THE  FUTURE     139 

better  share  in  the  advantages  and  the  blessings 
of  civilization,  which  are  so  largely  the  results  of 
their  labor.  Not  only  have  they  a  right  to  gen- 
erous education  and  to  free  enjoyment  of  the 
agencies  of  culture  possessed  by  the  nation,  but 
they  can  justly  claim  a  higher  degree  of  material 
welfare  —  in  other  words,  a  larger  share  in  the 
national  income.  How  is  the  latter  to  be  se- 
cured? There  are  two  ways  in  which  the  desired 
end  may  be  reached.  First:  The  workman  may 
benefit  by  the  increasing  productivity  of  national 
labor.  This,  however,  would  at  best  be  a  slow 
and  uncertain  process,  and  Wagner  advocates  a 
more  effective  method  of  raising  the  position  of 
the  workingman.  Second:  Labor  may  benefit 
at  the  expense  of  capital,  the  lower  classes  may 
benefit  at  the  expense  of  the  higher,  by  the  lat- 
ter giving  to  the  laborer  better  remuneration, 
higher  wages,  which  implies  the  reduction  of 
profit,  interest,  and  rent  in  their  various  forms. 
Wagner's  position  differs  from  that  of  the  So- 
cialists in  that  they  would  abolish  social  inequal- 
ities while  he  would  only  seek  to  diminish  them.'* 
Professor  Wagner  wrote  for  the  Tuebinger 
Zeitschrifi  in  1887  a  programme  for  political  ac- 
tion, in  part  subjoined:1 

1  Mr.  Dawson's  summary. 


140       MONARCHICAL  SOCIALISM 

I.  A  better  system  of  production,  by  means  of  which 
production  may  above  all  things  be  assured  an  ordered 
course,  instead  of  the  utterly  irregular  one  which  prevails 
at  present.     Prevention  of  the  employment  of  "  economic 
conjectures"  by  individuals  at  the  expense  of  others;  there- 
fore, checks  against  speculation.     More  comprehensive 
participation  by  the  mass  of  the  population,  especially  by 
the  working  classes,  but  also  by  other  people  in  humble 
positions,  in  the  material  benefits  and  the  blessings  of  civ- 
ilization caused  by  the  increase  of  the  productive  forces; 
therefore,  increase  of  wages  both  absolutely  and  relatively, 
considered  as  a  quota  of  the  produce,  assured  employment, 
restriction  of  the  hours  of  labor,  especially  of  daily  labor, 
to  an  extent  called  for  by  sanitary  and  moral  considera- 
tions, and  suited  to  technical  circumstances  at  any  given 
time,  the  term  varying,  of  course,  in  different  branches  of 
production;  exclusion,  as  far  as  possible,  of  children  from 
paid  employments,  especially  when  the  conditions  are  sani- 
tarily and  morally  dangerous;  similar  restriction  of  female 
work,  especially  in  factories;  adequate  precautions  against 
accidents  during  employment    and    provision    for  their 
consequences;  insurance  against  sickness,  incapacity,  and 
old  age,  with  provision  for  widows  and  orphans.     Conse- 
quently, special  development  of  all  the  legal  maxims  —  both 
in  public  and  civil  law  —  measures,  and  institutions  which 
are  included  in  the  catchwords  "  protection  of  the  working- 
man"  and  "industrial  insurance,"  or  "industrial  insurance 
legislation." 

II.  Inclusion  in  the  administrative  duties  of  the  state, 
the  parish,  and  the  other  public  bodies  of  such  measures 
as  conduce  to  the  moral,  intellectual,  sanitary,  physical, 
economic,  and  social  advancement  of  the  mass  of  the  peo- 
ple; so  far  as  may  seem  necessary  and  expedient,  the  ex- 
penditure of  public  money  for  these  purposes,  without  fear 


LOOKING  TOWARD  THE  FUTURE     141 

of  the  "public  communism"  which  would  to  some  extent  be 
thereby  encouraged.  This  implies  the  recognition  of  the 
principle  of  state  help  —  legislative,  administrative,  and 
financial  —  for  the  lower  classes  conjointly  with  self-help 
and  the  co-operative  system. 

III.  Adjustment  of  financial  arrangements  in  such  man- 
ner that  a  larger  part  of  the  national  income,  which  now 
falls,  in  the  form  of  rent,  interest,  undertaker's  profits,  and 
profits  from  "conjunctures"  (profits  due  to  speculation, 
chance,  spontaneous  increase  in  values,  etc.),  to  the  class 
possessing  land  and  capital  and  carrying  on  private  under- 
takings, may  be  diverted  into  public  channels.    Transfer- 
ence to  the  state,  parish,  etc.,  of  such  land,  capital,  and 
undertakings  as  may  economically  and  technically  be  well 
managed  in  public  hands,  and  such  as  most  easily  develop 
in  private  hands  into  actual  monopolies,  peculiarly  tend 
to  enterprise  on  a  great  scale,  or  even  now  are  carried  on 
by  public  companies,  a  form  of  undertakership  which  in 
its  advantages  and  defects  approximates  to  public  enter- 
prise both  economically  and  technically.  .  .  .  [Here  Wag- 
ner proposes  to  place  such  undertakings  and  institutions 
as  means  of  communication  and  transport,  the  banking  and 
insurance  systems,  water  and  gas  works,  markets,  etc.,  in 
the  hands  of  the  state  or  the  parish.     His  idea  is  that  the 
state  and  public  bodies  would  and  should  deal  more  con- 
siderately and    generously  with   their  officials  and   em- 
ployees generally  than  private  undertakers  and  capitalists, 
and  that  their  good  example  would  be  a  social  blessing.] 

IV.  Public  revenue  to  be  so  raised  as  to  allow  of  the 
"communistic"  character  of  public  bodies,  above  described, 
being  developed  wherever  decided  objections,  consequent 
upon  the  peculiar  circumstances  of  the  case,  do  not  exist. 
This  "communistic"  character  to  be  strengthened  in  favor 
of  the  poorer  and  socially  weaker  classes,  with  whom  the 


142       MONARCHICAL  SOCIALISM 

economic  and  social  struggle  for  existence  and  for  social 
advancement  is  severest,  by  means  of  a  system  of  admin- 
istrative measures  calculated  especially  to  benefit  them, 
yet  the  cost  of  which  shall  be  defrayed  by  the  general 
revenue  and  taxes.  But  this  "communistic"  character  of 
state  activity  to  be  weaker  where  the  interests  of  the 
well-to-do  and  richer  classes  of  society  come  especially  or 
exclusively  into  question.  Here  expenditure  should  be 
rather  covered  by  a  just  system  of  taxes  —  including  taxes 
based  on  the  principle  of  taxation  according  to  benefit  — 
than  by  the  use  of  the  general  revenue.  This  implies  the 
regulation  of  the  post,  telegraph,  and  railway  tariffs, 
judicial  charges,  school  fees,  etc. 

V.  Taxation  to  be  so  adjusted  that,  besides  fulfilling  its 
primary  function,  that  of  providing  the  revenue  needed  to 
cover  public  requirements,  it  may  as  well  as  possible  fulfil 
a  not  less  important  indirect  purpose,  which  is  twofold: 
(1)  regulative  interference  with  the  distribution  of  the 
income  and  wealth  of  private  persons,  so  far  as  that  dis- 
tribution is  the  product  of  free  economic  intercourse  — 
as  by  the  medium  of  prices,  wages,  interest,  and  rent  — 
with  a  view  to  counteracting  the  harshness,  injustice,  and 
excessive  privileges  caused  by  the  distribution  obtaining 
in  this  intercourse;  (2)  and  at  the  same  time  regulative  in- 
terference, supported  necessarily  by  further  administrative 
measures,  and  eventually  by  compulsion  (as  in  the  domain 
of  industrial  insurance)  in  private  consumption.  This 
latter  can  be  done  by  making  the  lower  classes  provide  — 
by  means  of  direct  and  indirect  taxes,  especially  indirect 
(excise),  which  in  this  connection  are  often  very  suitable  — 
the  revenue  necessary  for  administrative  purposes  calcu- 
lated to  benefit  them,  this  being  effected  by  diverting 
income  which  they  may  be  applying  to  improper,  perhaps 
injurious,  or  at  least  less  necessary  and  wholesome,  pur- 


LOOKING  TOWARD  THE  FUTURE     143 

poses  (e.  g.,  drink)  to  purposes  more  beneficial  to  society, 
the  class,  or  the  individual.  This  two-sided  policy  of  tax- 
ation I  call  social.  The  second  side  here  advanced  ...  is 
based,  as  concerns  the  mass  of  the  population,  the  lower 
laboring  classes,  on  the  assumption  that  in  the  truest  in- 
terests of  the  nation  a  guardianship  may  and  must  be 
exercised  over  the  national  consumption  or  over  the  ap- 
plication of  income  to  personal  purposes. 

The  foregoing  programme,  in  part  or  in  whole, 
amplified  here  or  restricted  there,  has  been 
broadly  the  programme  of  economic  teaching 
in  German  universities  and  of  dominant  political 
action  during  a  generation.  Although  one  can- 
not assume  that  the  monarchy  has  taken  over 
these  conceptions  in  a  block,  they  indicate  the 
general  direction  in  which  German  statesman- 
ship is  headed.  The  Tightness  of  the  ideas  can 
be  determined  by  experience  alone.  They  have 
been  slowly  gathering  a  momentum  in  Germany 
which  nothing  probably  can  stop  except  detri- 
mental consequences. 

The  experience  of  the  German  people  in  test- 
ing on  a  great  scale  certain  social  and  economic 
ideas  must  have  significance  for  other  peoples 
whether  that  experience  be  favorable  or  un- 
favorable. 


X 


IT  is  not  easy  to  leave  these  essays  on  eco- 
nomic Germany  without  some  further  refer- 
ence to  Emperor  William,  upon  whom  more 
than  any  other  German  rests  the  responsibility  of 
seeking  to  raise  the  whole  people  by  a  modified 
socialism.  The  Emperor  does  his  work  under 
intense  criticism.  His  own  people,  the  most 
critical  probably  in  the  world,  are  his  sharpest 
and  unkindest  observers. 

"Those  who  live  under  the  strong  hand,"  says 
one  anonymous  pamphleteer,  "may  at  least  ob- 
serve whether  it  is  manicured  or  not." 

The  sneer,  the  derisive  anecdote,  the  con- 
temptuous remark  are  the  natural  means  of  po- 
litical expression  of  even  highly  placed  subjects 
in  a  semi-autocratic  monarchy. 

The  international  situation  in  Europe  is  such 
that  every  act  and  utterance  of  the  Emperor  is 
studied  abroad  with  the  purpose  of  seeing  some- 
thing to  his  disadvantage.  All  the  agencies  of 
detraction  are  at  work  both  in  and  out  of  Ger- 

144 


EMPEROR  WILLIAM  II  145 

many  to  weaken  and  discredit  the  master  of  the 
German  commonwealth.  The  Emperor  and  the 
ruling  group  near  him  are  no  doubt  more  sen- 
sitive to  criticism  than  they  would  be  were  they 
elected  by  the  people  or  responsible  to  parlia- 
mentary majorities. 

Yet,  taking  impressions  about  the  Emperor 
both  within  and  outside  his  country,  he  has 
grown  in  the  respect  and  confidence  of  public 
opinion  during  the  twenty -five  years  of  his  reign. 
One  may  even  imagine  the  Emperor,  already 
gray,  becoming  venerable  and  admired  for  qual- 
ities not  appreciated  during  his  more  arduous 
years.  Take  the  Emperor's  habit  of  frank 
speech  in  public  and  in  private. 

"Bismarck  told  me,"  said  the  Emperor  on  one 
occasion,  tapping  his  breast  with  a  forefinger, 
"  that  every  man  has  the  scoundrel  in  here.  You 
may  not  see  him  but  there  he  is  ready  to  jump 
out  at  you.  Such  a  man  was  not  a  suitable  ad- 
viser for  a  sovereign.  For  in  a  sovereign,  sus- 
picion is  ruin." 

The  Emperor  did  not  mention  when  it  was 
that  the  chancellor  whom  he  afterward  dismissed 
thus  counselled  him,  but  it  may  be  supposed 
as  having  been  during  the  course  of  those  lect- 
ures on  state-craft  that  the  veteran  gave  the 


146       MONARCHICAL  SOCIALISM 

Emperor  when  he  was  heir  presumptive.  The 
statesman  who  had  said  that  the  lie  was  the 
seventh  power  in  Europe  must  have  discerned 
that  the  young  prince  believed  in  mankind,  that 
he  was  one  of  the  most  open,  one  of  the  least 
distrustful  of  men. 

William  II  enjoys  the  give  and  take  of  con- 
versation and  probably  finds  therein  something 
of  that  contest  on  equal  terms  which  as  a  sov- 
ereign is  denied  him  in  affairs.  He  is  gifted  in 
the  after-dinner  thrill,  the  surprising  remark  on  a 
foreign  situation,  the  dramatic  story  of  a  per- 
sonal experience,  the  latest  disclosure  in  the  news 
of  the  day,  or  some  thoughtful  observation  on 
the  meaning  of  things.  His  sense  of  humor  is 
unfailing.  He  follows  up  a  story  with  one 
equally  good  and  pertinent. 

The  personal  attributes  that  affect  the  Em- 
peror's administration  appear  to  be  the  every- 
day virtues  of  clean  living,  hard  work,  and  knowl- 
edge. I  call  them  every-day  virtues,  though  in 
the  high  degree  in  which  they  are  combined  in 
the  Emperor  they  are  rare  and  distinguish  him 
from  most  of  mankind.  Like  General  Sherman, 
the  Emperor  sleeps  short  hours;  five  or  six  keep 
him  refreshed  and  at  his  best.  He  has,  there- 
fore, two  or  three  more  hours  in  each  day  for 


EMPEROR  WILLIAM  II  147 

other  things  year  in  and  year  out  than  most 
men.  The  Emperor  during  the  late  spring  and 
the  summer  months  is  often  on  the  drill-ground 
at  five  or  half-past  in  the  morning,  although  he 
had  probably  gone  to  bed  later  than  any  junior 
lieutenant  of  the  regiment.  Thence,  through  a 
long  day  of  various  public  engagements,  audi- 
ences, social  or  semi-social,  semi-political  affairs, 
he  manages  to  put  in  from  four  to  six  hours  desk 
work  examining  reports  and  documents  directly 
concerning  public  business.  His  examination  is 
in  no  way  formal  or  hasty.  The  ministerial  ar- 
chives contain  simply  thousands  of  papers 
upon  the  broad  margins  of  which  the  Emperor 
has  written  suggestions,  alterations,  comments, 
or  questions  vital  to  the  subject. 

The  Emperor  is  a  man  greedy  for  ideas.  In  his 
great  position  they  come  pouring  in  upon  him 
from  every  quarter  and  he  goes  out  to  seek  them 
whenever  he  thinks  that  a  man  or  an  object  can 
supply  them.  His  interest  in  life  and  in  every 
variety  of  it  is  extraordinarily  sustained.  Mem- 
bers of  his  entourage  feel  a  certain  exhaustion 
after  having  been  with  him.  Their  minds  and 
spirits  fail  to  keep  up  with  his  rapid  vitality. 
Others  simply  like  to  gather  and  purvey  thought 
to  the  sovereign.  Another  kind  of  man  agree- 


148       MONARCHICAL  SOCIALISM 

able  to  him  is  the  large,  slow  individual,  not  too 
rich  in  ideas,  whose  presence  is  restful  and  whose 
chief  merit  as  a  courtier  is  the  habit  of  calm 
listening.  The  Emperor  has  the  power  to  draw 
out  of  a  man  the  best  in  him.  In  those  summer 
cruises  to  the  northern  seas  he  will  take  as  his 
guests  twenty,  thirty,  or  even  forty  of  the  most 
vigorous  minds  and  active,  driving  men  in  Ger- 
many for  his  mental  recreation.  Probably  no 
man  knows  as  much  of  the  new  things  in  the 
world  and  the  expectancies  of  life  as  he.  Orville 
Wright  found  his  knowledge  of  aerial  mechanics 
singularly  complete  and  his  intelligence  at  work 
upon  precisely  the  sides  of  the  problem  that 
ought  to  be  solved  next. 

A  bureaucracy  endeavors  to  take  more  and 
more  power  into  its  own  hands.  Hence  the 
functionaries  of  state  surrounding  the  sovereign, 
even  though  selected  by  him,  regard  jealously 
any  word  or  public  act  of  his  that  they  have  not 
advised  and  which  has  not  been  spoken  or  done 
through  them.  Some  of  the  protest  at  home 
against  the  Emperor's  utterances  has  been  en- 
couraged secretly  by  members  of  the  govern- 
ment. They  have  looked  with  a  certain  satis- 
faction also  upon  the  effects  abroad  of  some 
things  the  Emperor  has  said,  their  constant  ef- 


EMPEROR  WILLIAM  II  149 

fort  being  to  limit  his  prerogatives  except  when 
exercised  through  them.  The  Chancellor  and 
his  ministers,  having  the  public  responsibility  of 
representing  the  Emperor  in  governing,  do  not 
wish  him  to  be  taking  counsel  outside  their  cir- 
cle, or  to  say  things  unexpectedly  which  they 
must  explain  and  support  officially. 

The  late  Baron  Fritz  von  Holstein,  for  sixteen 
years  the  guiding  mind  of  the  Foreign  Office, 
once  remarked  of  the  Emperor: 

"His  Majesty  takes  a  dramatic  result  for  a 
political  success."  The  Emperor,  von  Holstein 
added,  was  therefore  often  delighted  when  some 
speech  or  conversation  caused  agitated  com- 
ment. 

Is  the  Emperor  equal  to  his  immense  work  as 
the  permanent  executive  of  the  German  union  of 
states?  or  one  might  ask,  Could  any  man  be  equal 
to  the  task?  With  his  powers  under  the  German 
constitution  and  his  larger  powers  as  the  King 
of  Prussia,  Emperor  William  is  incomparably 
the  strongest  political  force  moving  the  German 
people.  How  has  he  met  these  enormous  re- 
sponsibilities? The  government  of  Prussia  and 
of  Germany  is  the  reply.  To  understand  that 
reply  would  require  an  earnest  examination  of 
the  Emperor's  part  in  all  the  German  history  of 


150       MONARCHICAL  SOCIALISM 

the  period.  Yet  a  wide  glance  at  general  results 
seems  to  reveal  the  Emperor  as  a  great  and  ca- 
pable administrator.  He  has  chosen,  as  he  must, 
all  his  chancellors  and  ministers  since  Bismarck. 
He  has  decided  promotions  for  the  higher  grades 
of  every  division  of  the  national  service  during 
his  reign,  now  (1913)  in  the  twenty-sixth  year: 
ambassadors  abroad,  educators,  army  and  navy 
commanders,  judges  of  appeal,  the  supervisors 
of  the  Lutheran  Church,  and  the  thousand  other 
appointees  in  the  higher  levels  of  the  public  ser- 
vices. The  government  official  of  Germany  ap- 
pears incorruptible,  trained,  efficient,  progres- 
sive. He  usually  does  his  work  amazingly  well. 
Being  the  deciding  voice  in  political  matters  in 
Germany,  the  Emperor  has  been  related  directly 
with  all  imperial  and  Prussian  policies  which 
have  made  the  German  people  powerful  in  this 
quarter-century.  Had  he  been  indolent,  in  the 
hands  of  unscrupulous  favorites,  cynical,  or  stub- 
bornly wrong-headed,  he  could  have  hindered, 
possibly  wrecked,  the  national  progress.  He  has 
had  to  resist  the  military  party  at  various  crises, 
the  ultra-conservative  representations  of  able 
advisers  in  domestic  politics,  and  the  intrigues 
of  ambitious  statesmen  who  have  sought  to  un- 
dermine the  premier  ministers.  The  Emperor's 


EMPEROR  WILLIAM  II          151 

intelligence,  his  love  of  honest  dealing,  and  the 
restraint  of  his  personal  habits  have  saved  him 
from  many  a  danger.  No  one  who  has  observed 
the  way  in  which  any  important  public  question 
is  decided  in  Germany  can  doubt  that  he  is  the 
ruler  and  that  his  mastery  is  not  nominal  merely, 
but  actual. 

It  is  difficult  to  detach  a  man  from  his  setting 
and  estimate  him  from  what  he  would  appear 
to  be  as  an  isolated  unit.  Such  an  examination 
would  overlook  indeed  the  meanings  that  are  to 
be  discerned  in  functions  and  relationships.  One 
sees  the  German  Emperor  in  a  splendid  setting, 
the  first  citizen  in  one  of  the  three  or  four  most 
powerful  societies  of  the  earth,  using  his  political 
leadership  for  the  well-being  of  masses  yet  con- 
tending valiantly  for  the  principle  of  monarchy 
against  the  deep  currents  of  the  age.  The  com- 
mon judgment  of  men  who  have  met  him,  when 
they  have  discussed  him  privately,  is  that  quite 
incognito  the  German  sovereign  would  be  taken 
for  an  individual  of  remarkable  force  and  charm, 
whether  one  met  him  casually  in  a  parlor-car 
going  west,  in  the  club  smoking-room,  catching 
trout  along  a  country  stream,  or  in  a  sitting  of 
geographers  discussing  polar  exploration.  The 
constant  effort  of  the  Emperor's  visitors  is  to 


152       MONARCHICAL  SOCIALISM 

conceive  what  he  would  have  been  in  private 
life  without  vast  inherited  opportunities.  Meas- 
ured by  his  aptitude  for  knowledge  and  work  he 
would  probably  have  been  distinguished  in  any 
calling  that  he  might  have  entered,  that  of  the 
sea,  engineering,  forestry,  or  any  line  of  public 
service. 


XI 

SOME  REFLECTIONS  ON  THE  GROWTH 
OF  THE  GERMAN  NAVY 

GERMANY  has  philosophers  and  lovers  of 
mankind  who,  believing  in  the  unity  of 
the  race,  would  that  nations  should  ar- 
range a  permanent  peace  and  accept  in  a  spirit 
of  fair  play  decisions  of  umpires  when  govern- 
ments do  not  interpret  alike  the  principles  of  in- 
ternational justice.  The  idea  of  war,  because 
the  military  organization  of  the  country  directly 
affects  every  home  and  family,  is  more  distress- 
ing in  Germany  probably  than  in  the  United 
States  or  in  Great  Britain.  England  has  not 
been  invaded  in  force  during  eight  and  a  half  cen- 
turies. Merely  the  historic  memory  of  Napo- 
leon's preparations  for  invasion  causes  a  feeling 
of  relief  and  thankfulness  that  they  failed.  Ger- 
many has  had  a  different  and  a  terrible  national 
experience,  which  is  ever  in  the  background  of 
consciousness  when  war  and  policies  pertaining 
to  war  are  discussed.  The  child  in  school  can- 
not avoid  learning  from  the  primer  history  that 

153 


154       MONARCHICAL  SOCIALISM 

the  population  during  the  Thirty  Years'  War 
sank  from  22,000,000  to  6,000,000.  From  times 
that  were  remote  when  Columbus  discovered 
America,  war  has  swept  Germany  during  nearly 
every  generation  excepting  the  periods  following 
the  military  revival  of  Prussia,  which  contrib- 
uted to  the  overthrow  of  Napoleon,  and  during 
the  forty-two  years  of  peace  since  the  end  of 
the  French  war  and  the  unity  of  the  German 
states.  German  cities  have  been  sacked  within 
a  century. 

Grimmelshausen's  classic  "Simplicius  Sim- 
plicissimus,"  a  romantic  narrative  of  the  Thirty 
Years'  War,  of  the  brutalities,  insensate  cruelties, 
plunderings,  and  ravishings  of  the  period,  has 
sunk  into  German  sensibilities  as  deeply  as  did 
"Uncle  Tom's  Cabin"  into  the  feelings  of  the 
North  before  the  Civil  War.  The  Germans  of 
to-day  bear  a  weight  of  armaments  to  escape  the 
vivid  terrors  of  the  past  and  to  feel  that  fine 
sense  of  security  unknown  to  their  ancestors. 
The  thought  and  the  immense  labors  bestowed 
upon  preparedness  for  war  are  reactions  from  the 
sufferings  of  the  past. 

Preparations  for  war,  in  the  spirit  in  which 
the  German  looks  upon  them,  grow  in  what 
seems  a  human  and  a  reasonable  manner  from  a 


GROWTH  OF  THE  GERMAN  NAVY   155 

body  of  political  thinking  derived  from  the  na- 
tional experience,  and  not  essentially  different 
in  regard  to  the  use  of  force  from  that  of  other 
great  civilized  peoples. 

Emperor  William  decided  during  the  period 
following  the  Kriiger  telegram  that  Germany 
ought  to  have  a  navy  of  evident  power  if  the 
country  were  to  be  secure  from  foreign  resent- 
ment and  threats  out  of  proportion,  in  the  Ger- 
man view,  to  the  cause  of  offence.  It  is  not 
necessary  to  determine  the  political  wisdom  of 
the  Kriiger  telegram  or  whether  the  reception 
of  it  in  England  was  justified  by  its  contents. 
It  does  seem  essential,  however,  to  understand 
in  outline  an  event  in  which  is  to  be  found  the 
seed  of  the  great  efforts  Germany  has  put  forth 
to  create  a  navy  and  which  she  continues  to  put 
forth. 

The  German  Foreign  Office,  on  the  eve  of  the 
Jameson  raid,  had  received  a  petition  by  cable 
from  German  residents  hi  Pretoria  for  a  guard 
from  a  German  war-ship  at  Delagoa  Bay  to  be 
sent  to  Pretoria  for  their  protection.  President 
Kriiger  some  time  previously  had  asked  German 
promises  for  aid  against  Great  Britain  should 
there  be  war  and  he  had  been  refused,  although 
unquestionably  the  German  people  took  the 


156       MONARCHICAL  SOCIALISM 

Boer  side  of  the  controversy.  The  news  that 
the  Transvaal  Government  had  engaged  and  de- 
feated the  Jameson  raiders  gave  the  Emperor 
occasion  to  send  President  Kriiger  the  subjoined 
despatch  published  in  The  Imperial  Gazette  of 
January  3,  1897: 

"I  express  to  you  my  sincere  congratulations 
that,  without  appealing  to  the  help  of  friendly 
powers,  you  and  your  people  have  succeeded  in 
repelling  with  your  own  forces  the  armed  bands 
which  have  broken  into  your  country,  and  in 
maintaining  the  independence  of  your  country 
against  foreign  aggression." 

The  Times  correspondent,  in  telegraphing  the 
news,  said: 

"This  telegram  must  not,  however,  be  taken 
as  merely  an  expression  of  the  Emperor's  per- 
sonal feeling.  It  was  drawn  up  at  the  Chancel- 
lor's palace  where  the  Secretary  of  State  for  For- 
eign Affairs  Baron  von  Marschall,  the  Secretary 
of  the  Imperial  Navy  Admiral  Hollman,  and 
others  had  been  summoned  by  Prince  Hohen- 
lohe  to  confer  with  the  Emperor.  It  assumes, 
therefore,  the  character  of  a  state  document  of 
the  highest  importance,  the  more  so  as  it  con- 
tains an  unqualified  recognition  of  the  inde- 
pendence of  the  South  African  Republic." 


GROWTH  OF  THE  GERMAN  NAVY   157 

The  publication  of  the  telegram  moved  the 
people  of  Great  Britain  far  more  deeply  than  did 
the  Venezuelan  message  of  President  Cleveland 
a  few  weeks  earlier.  The  British  Government 
began  instant  preparations  for  war.  The  Times 
of  January  8  published  under  triple  head-lines  — 
an  unusual  device  in  those  days  —  nearly  a  col- 
umn announcement,  beginning  as  follows: 

"NAVAL  PREPARATIONS 

A  FLYING  SQUADRON  FORMED 
SHIPS  OBDEBED  TO  DELAGOA  BAY 

"Orders  have  been  sent  to  Portsmouth,  Dev- 
onport,  and  Chatham  for  the  immediate  commis- 
sioning of  six  ships  to  form  a  flying  squadron, 
and  it  is  understood  that  the  captains  to  com- 
mand these  ships  have  already  been  chosen. 
The  object  of  this  move  is  obviously  to  have  an 
additional  squadron  ready  to  go  anywhere  which 
may  either  reinforce  a  fleet  already  in  commis- 
sion, if  thought  desirable,  or  may  constitute  a 
separate  force  to  be  sent  in  any  direction  where 
danger  may  exist." 

The  Times  began  a  column  editorial  on  the 
subject  with:  "The  country  will  learn  with  satis- 
faction that  the  augmented  naval  preparations 


158       MONARCHICAL  SOCIALISM 

t 
which  we  advocated  yesterday  have  been  taken 

in  hand  with  vigor  and  promptitude."  The  edi- 
torial concluded  with  a  reference  to  the  "preten- 
sion of  the  German  Emperor  to  tear  up  our 
treaties  at  his  pleasure."  The  Times  on  the  fol- 
lowing day  announced  that  special  preparations 
were  in  progress  for  mobilizing  a  portion  of  the 
reserve  fleet,  and  that  pressing  orders  had  been 
issued  to  hurry  the  refitting  of  other  ships. 
Emergency  military  preparations  also  had  been 
ordered  by  the  government.  Commenting  on 
explanations  and  the  avowals  in  Berlin  that  no 
unfriendly  act  had  been  meant  by  the  Kriiger 
telegram  The  Times  said: 

"The  official  and  semi-official  press  of  Ger- 
many, which  a  week  ago  could  not  find  language 
picturesque  enough  to  reach  the  height  of  its 
great  resolves,  is  now  roaring  as  gently  as  any 
sucking  dove." 

The  British  Government's  naval  preparations 
continued.  A  special  flotilla  of  torpedo-boat  de- 
stroyers for  service  with  the  Channel  and  fly- 
ing squadrons  had  been  placed  in  commission. 
The  attaching  of  destroyers  to  the  squadron  indi- 
cated, were  such  indication  necessary,  that  they 
were  to  be  employed  within  short  cruising  dis- 
tances. Two  thousand  men  were  working  extra 


GROWTH  OF  THE  GERMAN  NAVY  159 

time  at  Portsmouth,  and  the  activity  in  the 
Chatham  dock-yards  was  described  as  "unprec- 
edented." 

The  foregoing  gives  something  of  the  British 
Government's  dispositions  to  resent  by  arms  the 
action  of  the  German  Government,  or,  if  that 
were  not  designed,  to  impress  upon  Germans  their 
helplessness  on  the  sea  in  the  presence  of  British 
hostility.  The  attitude  of  the  German  Govern- 
ment within  twenty-four  hours  after  the  Kriiger 
telegram  was  to  explain  to  England  and  the 
world  that  no  offence  had  been  meant.  Such 
explanations  were  conveyed  officially  and  elab- 
orated upon  in  the  German  press.  The  Brit- 
ish preparations  were  regarded  with  consider- 
able astonishment,  then  with  apprehension,  and 
finally  with  a  sense  of  abasement.  The  British 
admiralty's  activity  continued  for  some  days 
after  Mr.  Balfour  had  announced  in  the  House  of 
Commons  on  January  16  that  no  foreign  power 
disputed  the  British  view  of  the  relations  with 
the  Transvaal. 

The  conviction  in  Germany  was  that  the 
British  Government  had  taken  an  opportunity  to 
humiliate  the  German  sovereign  and  the  German 
people.  The  naval  preparations  were  regarded 
as  in  no  other  light  than  a  threatening  demonstra- 
tion out  of  proportion  to  the  significance  of  the 


160       MONARCHICAL  SOCIALISM 

telegram  sent  to  Kriiger.  Had  good-will  been 
applied  to  the  interpretation  of  the  despatch  it 
might  have  been  taken  as  an  ill-judged,  though 
harmless,  expression  of  sympathy.  The  Ger- 
man feeling  was  that,  had  Germany  been  a  sea 
power  and  in  a  position  to  engage  Great  Britain 
—  even  on  unequal  terms  —  the  British  way  of 
receiving'the  telegram  would  have  been  different, 
and  that,  instead  of  flying  squadrons  and  special 
flotillas  of  torpedo-boat  destroyers  for  service 
with  the  flying  and  the  Channel  squadrons,  there 
would  have  been  an  acceptance  of  German  as- 
surance that  no  ill-will  had  been  intended.  Ger- 
many had  in  that  year  something  more  than 
1,500,000  tons  of  ocean-going  shipping.  Her  in- 
vestments abroad  amounted  to  $3,000,000,000. 
Her  trade  extended  to  most  parts  of  the  world, 
and  her  ambition  for  an  expansion  of  her  foreign 
commerce  and  her  dividends  from  undertakings 
in  foreign  countries  was  limitless,  The  govern- 
ment saw  this  fabric  of  foreign  enterprise  exposed 
to  destruction.  Political  writers  in  Germany  had 
treated  of  Germany's  need  for  a  navy  since  the 
empire  had  been  formed.  The  strategists  in  the 
general  staff  under  the  initiative  of  Field-marshal 
von  Moltke  had  prepared  theoretical  jstudies  of 
the  correlation  of  land  and  sea  forces  in  war.  In 
a  war  with  Russia  —  the  great  neighbor  whose 


GROWTH  OF  THE  GERMAN  NAVY   161 

immense  potentialities  rested  heavily  upon  the 
imagination  of  the  Germans  until  the  Russo- 
Japanese  war  —  the  fleet  could  be  employed 
with  advantage  in  closing  the  Russian  Baltic 
ports,  in  landing  troops  in  great  force  either  near 
Saint  Petersburg  or  at  any  intermediate  point 
whereby  operations  threatening  the  rear  of  Rus- 
sian armies  on  the  German  frontier  could  be 
executed. 

The  Emperor  had  read  and  had  been  impressed 
by  Captain  Mahan's  "The  Influence  of  Sea 
Power  on  History."  A  naval  officer  of  distinc- 
tion has  told  me  that  Captain  Mahan's  book 
had  as  much  to  do  with  the  building  of  the  Ger- 
man navy  as  any  other  single  influence.  Cer- 
tainly it  was  evident  that  the  power  of  Germany 
could  not  be  used  beyond  where  German  troops 
could  march  unless  a  navy  of  considerable 
strength  existed.  The  exposed  position  of  Ger- 
man commerce,  the  problem  studies  of  the  co- 
operation of  the  land  and  sea  forces  in  war,  the 
Emperor's  personal  convictions  on  the  subject 
of  a  navy,  were  the  latent  forces  released  into  full 
activity  by  the  consequences  in  England  of  the 
Kriiger  telegram.  The  United  States,  Italy, 
and  France  had  begun  from  five  to  fifteen  years 
earlier  to  expand  their  navies. 


The  first  German  naval  programme  was  ready 
by  November  10  of  the  same  year,  1897,  and 
was  adopted  by  the  Reichstag  the  next  spring. 
The  strategists,  however,  were  convinced  that  a 
small  navy  was  scarcely  better  than  no  navy, 
that  any  navy  must  be  sufficiently  large  to  be 
taken  into  account  by  Great  Britain  or  any  other 
power  as  a  serious  adversary,  were  war  to  take 
place. 

While  these  discussions  were  going  on,  the 
German  mail  steamer  Bundesrath  was  seized  by 
a  British  cruiser  off  the  East  African  coast  on 
suspicion  of  carrying  contraband.  The  seizure 
caused  high  feeling  in  Germany  and  was  the  oc- 
casion of  a  good  deal  of  arrogant  talk  in  England, 
where  German  sympathy  for  the  Boers  was  re- 
sented. The  Bundesrath  was  presently  released. 
The  incident  and  the  feeling  it  provoked  on  both 
sides  of  the  North  Sea  gave  the  second  push  to 
the  German  navy.  The  programme  of  1900  was 
resolved  upon.  The  key  idea  as  set  forth  in  the 
preamble  is  that  "Germany  must  possess  a 
battle-fleet  so  strong  that  a  war  with  her  would, 
even  for  the  greatest  naval  power,  be  accom- 
panied with  such  dangers  as  would  render  that 
power's  position  doubtful." 

While  the  German  naval  promoters  have  never 


GROWTH  OF  THE  GERMAN  NAVY   163 

planned  for  a  navy  equal  to  that  of  Great  Britain, 
they  do  work  for  a  navy  that  would  make  the 
British  Government  hesitate  to  attack  Germany 
under  avoidable  circumstances  and  that  would 
suggest  a  civil  attitude  should  the  two  govern- 
ments have  different  policies  upon  a  subject  of 
mutual  interest.  German  naval  plans  leave  to 
Britain  superiority  on  the  sea,  but  not  such  a 
superiority  as  leaves  German  shipping,  the 
sprinkling  of  German  colonies,  and  immense 
German  investments  in  other  countries  defence- 
less. Instead  of  a  proportion  of  seven  to  one, 
which  represented  the  ratio  of  naval  strength  on 
the  morning  the  Kriiger  telegram  was  sent,  the 
proportion  when  the  German  projects  are  com- 
pleted is  likely  to  be  about  three  to  two  in  favor 
of  Great  Britain.  Although  the  British  position 
on  the  sea  is  immensely  changed  thereby,  the 
security  of  the  British  Islands  can  hardly  be  en- 
dangered. Should  Great  Britain  consider  that 
the  national  security  requires  more  ships,  she 
will  probably  build  them.  She  cannot  retain  an 
overwhelming  superiority  upon  the  sea  without 
building  ships.  The  weakness  of  the  suggestions 
for  limitation  by  agreement  made  in  England  is, 
that  they  always  imply  that  Great  Britain  would 
be  willing  to  enter  into  an  arrangement  with  Ger- 
many on  the  permanent  principle  of  British  naval 


policy  —  that  Great  Britain  shall  have  a  navy  as 
large  as  any  two  other  powers.  Englishmen  ask 
that  Germany  should  undertake  to  confirm  by 
treaty  Britain's  supreme  position  on  the  sea. 
The  impossibility  of  a  nationally  young,  grow- 
ing, ardent,  self-confident  people  such  as  the 
Germans  entering  into  an  agreement  of  that 
kind  makes  the  suggestion  seem  queer  when 
looked  at  from  the  Continent.  No  British  states- 
man has  ever  mentioned  a  willingness  to  consider 
a  limitation  of  armaments  except  upon  the  fun- 
damental idea  that  Britain  retain  her  existing 
vast  preponderance  on  the  sea.  The  discussion 
of  limitation  upon  that  basis  does  not  seem  a 
futility  in  England;  in  Germany  it  is  regarded 
as  verging  upon  impudence. 

The  elder  Pitt,  in  the  middle  of  the  eighteenth 
century,  laid  down  the  principle  that  the  safety 
and  prestige  of  Great  Britain  lay  in  a  balance  of 
power  on  the  Continent,  that  England  could  not 
suffer  any  power  to  become  paramount  on  the 
mainland.  Therefore  France,  the  great  military 
power  on  the  Continent,  was  the  enemy  of  Eng- 
land. Pitt  made  headway  against  France  by 
alliances  on  the  Continent,  crippled  her  through 
the  aid  of  Frederick  of  Prussia  on  the  land,  de- 
feated her  at  sea,  and  added  the  French  colonies 
in  India  and  North  America  to  those  of  Britain. 


GROWTH  OF  THE  GERMAN  NAVY   165 

France  was  again  the  enemy  of  England  when 
Napoleon  rose  to  supremacy  on  the  Continent. 
For  a  century  and  a  half  the  first  aim  of  British 
foreign  policy  has  been  to  promote  an  equilib- 
rium on  the  Continent  so  that  contentions  there 
should  leave  her  free  in  other  parts  of  the  world 
and  should  keep  all  powers  in  Europe  seeking 
for  the  favor  of  England.  Since  the  reduction 
of  the  Russian  position  in  the  Japanese  war,  Ger- 
many has  become  the  predominant  military  state 
on  the  Continent.  The  aim  of  the  British  Gov- 
ernment has  been  to  arrange  a  system  of  en- 
tentes and  alliances  sufficient  to  hold  Germany 
in  check.  Doubtful  success  has  resulted.  The 
first  endeavor,  to  give  Morocco  to  France  without 
consulting  Germany  or  trading  with  her,  failed. 
The  joint  British  and  Russian  efforts  against 
Germany  and  Austria  in  the  Bosnian-Herze- 
govinian  annexations  failed.  Great  Britain  is 
being  gradually  excluded  from  a  deciding  influ- 
ence on  the  Continent.  If  Germany  had  never 
built  a  ship  nor  sold  a  yard  of  cloth  abroad,  the 
political  genius  of  British  statesmen  would  have 
singled  her  out  as  the  enemy  of  England  because 
of  Germany's  immense  and  growing  position  on 
the  Continent.  The  political  policies  of  Great 
Britain  are  the  ones  that  drive  her  into  hostility 


166       MONARCHICAL  SOCIALISM 

against  Germany.  Added  to  these  are  the  trade 
competition,  usually  much  exaggerated,  and  the 
rise  of  the  German  navy.  Relatively  British 
trade  has  not  expanded  so  fast  as  that  of  Ger- 
many, but  it  is  good  and  profitable,  making  the 
financial  position  of  the  United  Kingdom  still  the 
first  in  Europe, 

The  German  navy  is  serious  for  Great  Britain, 
not  because  the  safety  of  the  British  Isles  is  en- 
dangered nor  because  Germany  has  any  aggres- 
sive policy  against  her,  but  because  the  British 
political  position  throughout  the  world  will  be 
reduced  by  reason  of  the  existence  of  the  navy. 
That  position  has  already  been  greatly  changed 
by  the  rise  of  Japan  in  the  Far  East,  of  the 
United  States  in  the  Western  hemisphere,  of 
Germany  on  the  continent  of  Europe.  The 
British  fleets  in  the  East,  on  both  shores  of  North 
and  South  America,  and  in  the  Mediterranean 
have  been  lessened  to  strengthen  the  fleets  in 
home  waters,  so  that  Lord  Roberts  said  in  Octo- 
ber, 1912,  that  the  only  sea  on  which  the  Brit- 
ish fleet  was  master  was  the  North  Sea.  The 
British  naval  forces  will  become  further  concen- 
trated in  ratio  to  the  German  construction.  The 
prevailing  strategical  doctrine  will  require  Great 
Britain  to  have  at  home  a  naval  power  sufficient 


GROWTH  OF  THE  GERMAN  NAVY   167 

to  engage  on  more  than  equal  terms  a  fleet  of 
41  battle-ships  and  20  large  cruisers  within  one 
day's  sail  of  her  coasts. 

The  "relations"  between  Great  Britain  and 
Germany  are  in  continuous  discussion,  that  rises 
to  a  certain  intensity  when  the  British  naval 
budget  is  debated  in  Parliament  or  when  some 
European  question  bubbles.  These  "relations" 
are  likely  to  sharpen  in  international  importance 
until  the  German  navy  reaches  its  programme  de- 
velopment, which  will  be  between  1916  and  1918. 
I  venture  into  the  difficult  field  of  conjecture  as 
to  the  probable  course  of  events.  Ethical  con- 
siderations will  prevent  the  small  war  party  in 
Great  Britain  from  provoking  war  while  the 
German  navy  is  building.  When  the  German 
navy  has  reached  its  programme  maximum  and 
nothing  happens,  because  Germany  will  not 
throw  her  inferior  navy  against  Britain,  a  long 
peace  will  probably  follow  in  which  suspicions 
and  animosities  will  diminish.  The  British 
people  will  become  accustomed  to  a  certain 
diminution  of  their  international  position,  but 
with  an  immense  place  in  the  world,  a  place 
constantly  maintained,  perhaps  constantly  in- 
creased, through  their  spiritual  and  intellectual 
contributions  to  mankind. 


XII 
THE  PLAY  INSTINCT  IN  GERMANY1 

ONE  of  the  first  notions  the  foreign  ob- 
server takes  of  the  German  at  home  is 
that  he  isn't  much  of  a  person  to  play. 
Tourists  do  not  think  of  Berlin  as  a  pleasure 
city.  The  recreative,  the  sportive,  is  not  obvi- 
ous. The  theatre  is  for  education.  Music  is  for 
the  cultivation  of  the  emotions.  Sport  is  for 
physical  development.  The  constant  note  is  the 
utility  of  the  thing  and  its  relation  to  the  other 
parts  of  life.  This  is  a  consequence  of  the  enor- 
mous trust  the  German  puts  in  order,  system, 
preparation,  minute  arrangements  for  doing 
things. 

Life  is  a  difficult  business  for  most  Germans. 
The  thin  soils,  the  crowded  populations,  the  hard 
past  of  war  and  suffering  which  has  left  an  entail 
upon  the  present,  make  the  problems  of  a  liveli- 
hood and  of  rising  in  the  world  more  difficult 
than  in  France,  England,  or  Italy.  The  pervad- 
ing melancholy,  the  pessimistic  suggestion,  the 

1  Reprinted  from  Collier's  Weekly  by  permission  of  the  editor. 
168 


PLAY  INSTINCT  IN  GERMANY     169 

subtle  critical  faculty  of  the  highly  educated, 
press  upon  the  elemental  play  instinct  and  ques- 
tion its  right  to  existence  in  a  world  wherein  is 
so  much  to  do  and  yet  so  little  worth  while. 
The  urgency  of  the  dominant  practical  spirit 
seizes  on  the  disposition  to  play  and  harnesses 
it  up  to  some  form  of  social  discipline  or  per- 
sonal improvement.  Philosophy  gets  into  the 
games  and  even  romping  must  be  done  thought- 
fully. 

The  children  at  school  are  taught  how  to  play. 
An  instructor  on  the  grounds  during  the  recrea- 
tion hour  defines  how  the  game  of  the  moment 
should  be  played,  corrects  the  manners  of  the 
overboisterous,  and  stimulates  the  weaker  or 
more  timid  players  into  greater  exertions.  If  a 
motion  at  play  is  not  according  to  rule,  it  must 
be  repeated  correctly.  That  is,  at  least,  the 
instructor's  objective. 

While  watching  the  girls  on  a  school-ground 
one  of  the  first  fine  days  of  spring,  I  saw  some- 
thing of  the  German  method  of  regulating  youth- 
ful impulses.  The  busiest  figure  on  the  grounds 
was  the  young  woman  overseer. 

"No,  not  that  way,  Trudchen!"  exclaimed  the 
instructress;  "not  that  way.  You  must  hold 
your  hands  so  and  be  careful  not  to  step  on  the 


170       MONARCHICAL  SOCIALISM 

heels  of  Ottilie."  Trudchen  was  a  new-comer  in 
the  class,  and  was  being  taught  how  to  play  the 
German  equivalent  of  "London  Bridge  is  falling 
down." 

As  it  seemed  rather  absurd  to  carry  the  spirit 
of  the  school-room  into  the  smooth  gravelled  en- 
closure with  its  rectangles  of  trimmed  grass  and 
flower-beds  on  the  margins,  I  said  to  the  young 
woman,  with  whom,  presently,  I  was  talking: 

"Why  shouldn't  children  like  these  be  free  to 
do  just  as  they  please  in  the  playground?  Why 
should  they  be  bothered,  I  might  say  cramped, 
by  endeavors  to  train  them  at  play?" 

"I  might  reply,"  said  the  teacher  cheerfully, 
"that  my  work  in  the  play-yard  is  provided  for 
in  the  regulations  of  the  ministry  of  education, 
and  that  it  is  no  affair  of  mine  to  question  those 
regulations,  but  to  carry  them  out.  Yet  the 
theory  of  supervision  and  instruction  at  play  is, 
I  believe,  that  anything  worth  doing  at  all  is 
worth  doing  properly,  and  that  the  habit  of 
learning  the  right  way  of  doing  a  thing,  even  the 
way  to  play  a  game,  leaves  a  beneficial  impres- 
sion on  the  receptive  youth." 

"Not  much  chance  left  for  spontaneity  or  the 
unexpected." 

"The  unexpected  usually  means  some  rudeness 


PLAY  INSTINCT  IN  GERMANY     171 

or  thoughtlessness.  The  playground  may  be  a 
place  for  teaching  children  right  attitudes  to- 
ward one  another,  of  decency  in  language,  and  in 
unconsciously  cultivating  the  conviction  that 
there  is  a  choice  before  every  act  of  a  correct  or 
an  injudicious  way  of  performing  it." 

Probably  a  sound  reply.  One,  at  least,  that 
is  in  the  Prussian  spirit,  the  spirit  that  has  made 
modern  Germany  and  that  dominates  the  im- 
mense progressive  organism  that  seems  to  be 
doing  so  much  more  collectively  than  the  in- 
dividuals appear  capable  of  doing.  The  sys- 
tem, as  a  whole,  seeks  to  fit  the  individual  to  his 
place  like  a  brick  in  a  wall.  Only  in  the  first 
two  years  at  the  university  does  the  "system" 
provide  for  doing  as  the  young  man  pleases,  for 
the  indulgence  of  impulse  and  the  unchecked 
expression  of  the  sporadic. 

But  the  resilience  of  the  human,  the  reaction 
against  the  fine-webbed  social  process,  gives  the 
German  a  fine  power  of  enjoyment  when  his 
duty  has  been  done.  He  gives  himself  fully  to 
the  pleasure  of  the  hour  without  that  self-con- 
sciousness that  often  makes  the  American  feel 
that  he  is  acting  foolishly  if  he  abandons  himself 
to  the  spirit  of  a  jolly  occasion.  It  does  the 
Anglo-Saxon  good,  or  ought  to,  to  see  the  Ger- 


172       MONARCHICAL  SOCIALISM 

man  professor  out  for  an  evening.  The  sub- 
jective and  the  critical  are  quite  switched  off, 
and  the  surrender  to  simple  good-fellowship  and 
play  is  complete.  The  emotional  height  to 
which  Germans  go  in  the  appreciation  of  music 
is  a  release  from  the  pervading  orderliness  of 
life. 

The  passion  of  the  town-dweller  for  the  coun- 
try, the  town-dweller  of  modest  income,  causes 
the  large  towns  and  cities  to  be  encircled  with 
what  look  like  the  shanties  of  squatters  in  the 
West.  Around  Berlin  are  zones  of  open  fields 
divided  into  tens  of  thousands  of  plots  of  fifteen 
to  twenty  yards  square,  often  larger,  which  are 
let  for  the  summer  to  people  of  the  city. 

Each  rectangle  is  a  miniature  country-place. 
The  skilled  workman,  the  small  storekeeper,  the 
professional  man  of  moderate  income  rents  one 
of  these  little  farms  and  builds  a  tiny  house 
upon  it.  He  is  expected  to  build  this  house 
himself,  and  it  is  considered  bad  form  to  call  in 
carpenters  or  professional  help.  The  materials, 
it  is  true,  are  usually  bought  with  the  frames 
joined  and  the  various  parts  ready  to  be  put  to- 
gether. Acquaintances  and  friends  often  have 
adjoining  estates,  and  they  help  each  other 
in  house-building,  pioneer  fashion.  The  design 


PLAY  INSTINCT  IN  GERMANY     173 

and  creation  of  these  odd  structures  is  often 
studied  by  architects  of  reputation  for  sug- 
gestions in  originality  and  beauty.  Since  the 
shanties  are  the  expression  of  minds  usually 
ignorant  of  conventional  architecture,  they  are 
unconstrained  and  have  the  adaptation  to  ends 
that  serve  as  the  seed  ideas  for  greater  designs. 
Two  hundred  dollars  spent  on  a  house  would  be 
extravagant,  and  the  building,  with  spring  re- 
pairs, lasts  for  years. 

The  mother  or  the  maid  takes  out  the  children 
in  the  morning  or  after  the  mid-day  meal.  The 
father  joins  the  family  as  early  as  he  can  leave 
his  work.  They  have  a  cold  supper  with  tea  or 
coffee  or  beer,  and  spend  the  long  twilights  of 
the  northern  parallels  in  the  open  air.  The  little 
plantation  will  have  a  vegetable  patch,  a  flower- 
bed, and  perhaps  a  swing  or  a  doll-house. 

I  know  nothing  like  this  in  other  countries. 
There  must  be  a  hundred  thousand  of  these  im- 
provised villas  in  the  environs  of  Berlin,  each 
the  fresh-air  base  of  a  family,  plot  set  on  plot 
with  footways  between,  in  groupings  called  arbor 
colonies.  It  is  said  as  a  political  pleasantry  that 
these  are  the  only  successful  colonization  proj- 
ects of  the  empire. 

The  people  who  cannot  go  away  for  long  to  the 


174       MONARCHICAL  SOCIALISM 

sea-shore  or  to  the  mountains  find  in  these  day- 
light settlements  that  contact  with  green  things 
and  sunshine  and  air  mean  health  of  spirit  and 
reconciliation  to  the  arid  life  of  the  city.  The 
jangled  spirits  of  the  factory  or  shop-driven  em- 
ployee are  quieted  and  rested  and  tonicked  up 
for  the  battle  of  the  next  day.  The  mental  ef- 
fects on  the  grown  people  are  as  obvious  as  the 
health  and  fun  that  the  children  get. 

The  German  nature-cult  apart  from  sport  has 
a  deeper  influence  probably  upon  the  whole  na- 
tion than  among  any  other  people.  School-chil- 
dren are  taken  into  the  country  one  or  two  days 
every  week  by  one  of  the  teachers  and  taught 
the  names  and  the  meaning  of  things  they  see. 
Troops  of  boys  and  girls,  each  with  a  lunch-box 
or  knapsack,  walk  for  miles  into  the  country, 
through  the  public  forests,  learning  the  names  of 
the  plants,  the  animals,  and  the  birds,  how  they 
grow,  the  simple  outlines  of  mineralogy,  and  the 
components  of  the  earth.  The  children  have  a 
fine  day  in  the  open  air,  and  gradually  learn  to 
understand  and  to  love  the  fields  and  the  woods. 

The  habits  last  through  life.  The  American 
motorist  in  Germany  comes  across  the  adult 
everywhere  on  the  tramping  excursion.  The  Ger- 
man fifty  years  old,  often  of  stout  figure,  will  do 


PLAY  INSTINCT  IN  GERMANY     175 

his  thirty  or  forty  miles  a  day  walking  and  think 
nothing  of  it. 

The  walking  honeymoon  is  a  custom.  Young 
couples  who  prefer  to  keep  their  money  or  who 
haven't  any  for  a  wedding  trip  by  train,  swing 
knapsacks  over  their  shoulders  on  the  wedding 
day  and  set  out  for  a  week's  tramp,  stopping 
overnight  at  the  roadside  tavern.  A  story  is 
told  in  the  Bavarian  Alps  of  the  gloomy  young 
man  whose  extreme  melancholy  at  the  village 
inn  caused  sympathetic  inquiries.  He  confessed 
that  he  had  been  married  the  day  before  to  the 
belle  of  the  village  and,  as  they  didn't  have 
means  for  both  of  them  to  take  a  wedding  trip, 
he  had  been  obliged  to  tramp  alone. 

The  principle  of  utility  in  training  the  youth 
into  material  for  a  good  soldier  and  into  a  sub- 
ject who  will  be  qualified  to  contribute  to  the 
collective  good  of  the  state,  inspires  the  German 
gymnastic  system,  the  system  which  Ameri- 
can turners  at  the  great  Frankfort  tournament 
three  years  ago  found  to  be  unconquerable.  The 
American  or  the  English  athlete,  because  of  the 
development  of  his  individuality  under  different 
school  and  social  conditions,  will  not  surrender 
himself  unreservedly  into  the  hands  of  the  in- 
structor. He  thinks  he  knows  better  how  the 


176       MONARCHICAL  SOCIALISM 

exercise  should  be  taken  and  the  feat  performed 
than  the  instructor,  that  the  instructor's  method 
is  all  very  well  for  other  persons  or  very  good  for 
the  average  pupil,  but  that  he  knows  better  how 
he  should  do  the  thing.  The  German  does  the 
exercise  as  he  is  taught,  machine-like  possibly, 
but  with  highly  trained  precision.  The  team 
work  is  excellent.  Germany,  outside  the  schools, 
has  8,000  gymnastic  clubs  with  902,000  men  in 
them. 

The  ^cherry  trees  are  now  in  bloom  at 
Werder,  a  village  and  district  about  ten  miles 
from  Berlin.  The  newspapers  have  been  pub- 
lishing bulletins  for  days  regarding  the  progress 
of  the  buds  and  speculating  on  thfe*  days  they 
would  be  at  their  perfection  with  somewhat  the 
same  earnestness  as  the  betting  chances  on  the 
Futurity  are  calculated.  The  Emperor  and  the 
Empress  have  been  to  see  them,  and  on  the  same 
day  there  were  probably  a  quarter  of  a  million 
Berliners. 


APPENDICES 


APPENDIX  A 


THE  systems  of  imperial  insurance  in  operation  since 
1884  had  their  origin  in  the  famous  rescripts  of  Emperor 
William  I  of  November  17,  1881,  and  April  14,  1883. 
All  legislation  on  the  subject,  with  many  additions  and 
modifications,  was  codified  into  a  single  statute,  that  of 
July  11,  1911.  It  is  the  most  voluminous  law  of  the  Ger- 
man Empire,  with  the  exception  of  the  civil  code,  and  is 
set  forth  in  1805  numbered  paragraphs,  some  of  them 
pages  long  and  grouped  into  six  books  or  chapters.  This 
act  extended  invalid  insurance  to  widows  and  orphans  and 
increased  the  payments  to  beneficiaries  by  raising  the 
weekly  contributions.  The  Socialists  had  criticised  pre- 
vious laws  chiefly  on  the  ground  that  they  did  not  yield 
sufficient  results  to  make  them  worth  while. 

The  insurance  is  developed  in  three  ways,  according  to 
whether  the  insured  is  (a)  temporarily  ill,  (6)  injured  by 
accident,  or  (c)  enduring  prolonged  incapacity  or  old  age. 
The  work  in  all  these  varieties  of  insurance  goes  far  be- 
yond the  payment  of  money  to  the  persons  eligible.  Nu- 
merous hospitals  are  built,  particularly  homes  for  the  cure 
of  consumption  in  the  earlier  stages.  Physicians,  medi- 
cines, and  dentists  are  provided.  Inebriates  are  placed  in 
institutions.  Extraordinary  progress  has  been  made  in 

179 


180  APPENDIX  A 

the  treatment  of  injuries  by  surgeons  studying  under  the 
insuring  authorities.  These  authorities  are  more  directly 
co-operative  societies  or  companies.  Both  forms  of  organi- 
zation are  under  government  control.  The  managers  are 
chosen  for  four  years  by  employers  and  employed  on  a 
basis  of  proportional  voting.  Women  are  entitled  to  vote 
and  to  be  elected  to  the  management.  Membership  on  the 
managing  boards  may  not  be  declined  except  for  certain 
specific  reasons.  No  salaries  are  paid.  The  expenses  of 
members  while  discharging  duties  are  allowed  and  claims 
for  lost  wages  are  considered.  The  managers  and  boards 
for  localities  work  under  the  branches  of  the  imperial  in- 
surance office.  This  supreme  authority  consists  of  32 
permanent  or  so-called  standing  members  and  32  others. 
The  standing  members  are  appointed  by  the  chancellor. 
The  president  and  other  officers  are  named  by  the  Em- 
peror. Of  the  non-standing  members  the  federal  council 
elects  8,  6  of  whom  must  be  members  of  the  federal  coun- 
cil, the  representatives  of  the  insured  12,  and  the  repre- 
sentatives of  the  employers  12.  The  64  members  of  the 
imperial  insurance  office  work  through  committees  or 
senates  composed  of  7  members  when  deciding  insurance 
controversies,  or  5  members  when  disposing  of  other  busi- 
ness. Claims  for  insurance  are  lodged  first  with  the  co- 
operative or  the  insuring  company,  then,  if  denied,  upon 
appeal  to  the  local  branch  of  the  imperial  insurance  office. 
In  the  case  of  an  injured  workman,  the  employer  makes 
application  for  insurance.  An  investigation  follows.  If 
the  decision  is  adverse  or  the  workman  is  dissatisfied  with 
the  indemnity,  he  may  appeal. 

(1)  Sick  insurance  is  obligatory  upon  all  persons  work- 
ing for  wages  of  not  more  than  twenty-five  hundred  marks 
a  year.  The  law  of  1911  extended  the  application  to  la- 
borers working  on  irregular  or  short  contracts  in  agri- 


APPENDIX  A  181 

culture,  migratory  workmen,  workers  at  home,  and  unpaid 
apprentices.  Payments  to  or  for  the  sick  are  graded  ac- 
cording to  wages.  Help  during  illness  is  given  during  a 
maximum  of  26  weeks,  whereafter,  should  the  illness  con- 
tinue, the  charge  is  taken  over  by  the  invalid  department. 
Insurance  aid  consists  of  medical  treatment,  medicines, 
minor  requisites,  and,  from  the  fourth  day  of  incapacity, 
a  money  payment  equal  to  one-half  the  wages  previously 
earned.  Treatment  in  hospital  may  be  substituted  by 
the  authorities  for  money  payments,  although  in  that  case 
hah*  the  wages  in  cash  may  be  paid  to  the  dependents  of 
the  head  of  the  family.  Payments  for  lying-in  are  limited 
to  from  four  to  eight  weeks.  Twentyfold  the  daily  wage 
is  paid  for  burial  expenses  on  the  death  of  the  insured 
person. 

The  premiums  are  percentages  of  wages  earned.  They 
do  not,  as  a  rule,  exceed  four  and  one-half  per  cent. 
The  insured  pays  two-thirds  and  the  employer  one-third. 
The  employer  must  see  that  the  payments  are  kept  up; 
and  if  he  pays  them,  he  may  deduct  from  the  wages  of  the 
employee  the  percentage  due  from  him. 

(2)  Accident  insurance  is  divided  into  three  classifica- 
tions—  industrial,  agricultural,  and  marine.  There  was 
a  special  class  for  the  building  trades,  but  the  new  law 
incorporated  them  with  the  industrial. 

(a)  Industrial.  The  sphere  of  this  class  was  extended 
by  the  new  law  to  take  in  callings  not  hitherto  included. 
A  factory,  in  the  sense  of  the  law,  is  any  manufacturing 
concern  with  a  minimum  of  ten  employees.  Workmen  in 
every  manufactory  earning  five  thousand  marks  a  year  or 
less  must  be  insured.  The  limits  are  now  drawn  widely 
to  take  in  government  enterprises,  such  as  the  postal, 
the  telegraph,  and  the  railway  services;  chimney  sweeps, 
butchers,  bath-house  attendants;  livery-stable,  street-car, 


182  APPENDIX  A 

and  other  transportation  employees;  apothecaries,  timber- 
cutters,  raftsmen,  and  all  persons  engaged  in  establish- 
ments with  steam,  electrical,  or  other  mechanical  power. 
Artisans  working  for  themselves  are  admitted,  and  sub- 
managers  earning  less  than  five  thousand  marks  a  year. 

The  insurance  covers  losses  through  accident  or  death. 
Claims  are  not  valid  for  injuries  incurred  intentionally  or 
in  the  commission  of  punishable  offences.  Accident  insur- 
ance begins  with  the  fourteenth  week  after  injury.  Pre- 
vious to  that  time  the  patient  is  a  charge  upon  the  sick 
insurance.  Assistance  is  in  the  form  of  medical  treat- 
ment and  an  annuity  during  the  period  of  incapacity. 
Treatment  may  be  given  in  a  hospital  or  in  a  convales- 
cents' home.  The  annuity  amounts  to  two-thirds  of  the 
yearly  earnings  in  case  of  total  disability,  graded  d-f  n- 
ward  from  that  according  to  the  degree  of  incapacity.  In 
some  cases  of  total  disability  the  annuity  may  be  raised 
to  the  full  amount  of  the  wages  received  at  the  time 
disability  began.  Where  the  insured  is  killed,  his  widow 
and  orphans  (including  illegitimate  children)  receive  one- 
fifteenth  of  his  yearly  earnings,  cash  down,  for  burial  ex- 
penses, and  each  dependant  receives  an  annuity  of  one- 
fifth  of  his  wages,  but  all  of  them  together  may  not  receive 
more  than  three-fifths  of  his  wages. 

The  premiums  are  paid  by  the  employers,  the  charge 
being  pro-rated  upon  the  wages  earned.  The  associations 
of  employers,  formed  under  provisions  of  the  law,  arrange 
a  tariff  among  themselves,  under  government  supervision, 
calculating  the  danger  risks  in  different  sorts  of  work. 
The  premiums  paid  by  the  employers  are  assessed  accord- 
ingly. The  imperial  insurance  office  appoints  technical 
inspectors  whose  duty  it  is  to  see  that  all  regulations 
protecting  workingmen  from  danger  are  enforced.  The 
insurance  office  also  appoints  experts  with  the  right  to 


APPENDIX  A  183 

examine  the  books  of  employers  in  order  to  ascertain 
how  wages  are  paid  and  the  amounts. 

(6)  Agricultural.  Employees  in  this  class  are  not  farm 
hands  only  in  a  narrow  sense,  but  also  gardeners,  foresters, 
workers  in  land-improvement  operations,  repairers  of 
buildings,  and  employees  in  all  callings  subsidiary  to  agri- 
culture. The  employers  pay  the  premiums  under  some- 
what the  same  regulations  as  those  controlling  employers 
in  industrial  enterprises.  The  payments  in  some  states, 
such  as  Prussia,  are  collected  along  with  the  ordinary 
taxes. 

(c)  Marine.  The  payments  in  this  class  are  paid  by 
employers  according  to  the  monthly  average  wages,  not 
yearly,  as  in  the  other  classes.  All  persons  are  compul- 
sorily  insured  sailing  the  high  seas  or  employed  upon 
shore  or  near-shore  duty,  such  as  piloting,  fishing,  wreck- 
ing, life-saving,  and  docking. 

(3)  Invalid  and  widows'  and  orphans'  insurance  under 
the  law  of  1911  is  paid,  one-half  by  the  imperial  govern- 
ment, one-quarter  by  the  insured,  and  one-quarter  by  the 
employers.  The  funds  are  so  handled  that  they  are  suffi- 
cient to  pay  pensions  to  invalids,  to  persons  beyond  the  age 
of  seventy,  and  to  widows  and  orphans  of  insured  heads 
of  families.  A  feature  of  the  new  law  that  causes  strong 
opposition  in  sections  of  Germany  where  there  is  the 
greatest  prosperity  and  the  highest  wages  is  that  hah*  of 
the  sums  collected  in  premiums  are  diverted  into  a  general 
fund,  the  revenues  of  which  are  applied  evenly  throughout 
the  empire. 

All  persons  more  than  fifteen  years  old  receiving  wages 
must  be  insured,  including  master-workmen,  druggists, 
members  of  theatrical  troops  and  orchestras,  teachers  and 
tutors,  whose  earnings  do  not  exceed  two  thousand  marks 
a  year.  Insurance  is  optional  with  persons  receiving  more 


184  APPENDIX  A 

than  two  thousand  and  up  to  three  thousand  marks.  Ser- 
vants of  the  empire  or  of  any  state  are  excluded  from  this 
insurance,  as  they  are  provided  for  under  the  government- 
pension  system  for  civil  servants.  The  pension  of  a  widow 
is  cancelled  if  she  remarries. 

Insurees  are  divided  into  five  wage  classes  and  the 
weekly  contribution  amounts  to  16,  24,  32,  40,  and  48 
pfennigs  respectively,  divided  between  the  employers  and 
employees,  the  empire  adding  an  amount  equal  to  that 
paid  by  both  employers  and  employees.  The  insuree 
pastes  stamps  upon  a  card  each  week.  He  may  at  any 
time  add  on  his  own  account  an  additional  stamp  of  one 
mark.  These  supplementary  payments  draw  interest  at 
two  per  cent  and  the  revenues  are  added  to  the  insuree's 
ultimate  pension. 

An  additional  system  of  insurance  is  provided  by  a  law 
of  December  20,  1911,  for  insuring  employees  of  all  kinds 
not  included  in  the  systems  already  described  receiving 
salaries  up  to  five  thousand  marks  yearly.  This  law  is 
designed  to  take  care  of  office  employees,  clerks,  and  a 
variety  of  minor  help  in  enterprises  of  every  kind  who 
could  not  be  classified  under  the  workingmen's  insurance. 
Pensions  under  this  law  for  old  age  begin  at  sixty-five  and 
annuities  are  paid  to  widows  and  orphans  after  payment 
for  ten  years  by  men  and  five  years  by  women.  The  in- 
surees  are  classified  in  nine  grades,  according  to  the  sala- 
ries received,  and  the  monthly  contributions  range  from 
1.60  marks  to  26.60  marks.  The  premiums  are  paid  half 
and  hah*  by  insuree  and  employer. 


APPENDIX  B 

PROGRAMME  OF  THE  SOCIAL-DEMOCRATIC 
PARTY 

The  subjoined  declaration  of  principles,  adopted  at  the 
National  Convention  of  the  Social-Democratic  party  at 
Erfurt  in  1891,  has  remained  unchanged; 

The  economical  development  of  the  monied  class  brings 
as  a  natural  consequence  the  ruin  of  the  small  industries 
which  are  based  on  the  possession  by  the  workman  of  the 
implements  necessary  for  production.  It  deprives  the 
craftsman  of  his  implements  of  production  and  transforms 
him  into  a  person  without  property  whilst  the  implements 
of  production  become  the  monopoly  of  a  comparatively 
small  number  of  capitalists  and  great  land-owners. 

Hand  in  hand  with  such  a  monopolization  of  the  imple- 
ments of  production  we  see  the  supplanting  of  the  small 
scattered  industries  by  huge  industrial  establishments,  the 
development  of  the  tool  into  the  machine,  and  a  gigantic 
increase  in  the  productive  capacity  of  human  labor.  But 
all  the  advantages  of  such  a  transformation  are  monopo- 
lized by  capitalists  and  great  land-owners.  For  the  labor- 
ing classes  and  the  declining  middle  class  —  for  citizens 
and  farmers  —  it  means  an  ever  growing  uncertainty  as 
regards  their  existence,  ever  increasing  misery,  oppression, 
slavery,  abasement,  and  grinding  down. 

Ever  larger  grows  the  laboring  population,  ever  larger 
the  army  of  the  unemployed,  ever  deeper  the  abyss  be- 
tween those  who  exploit  and  those  who  are  exploited,  ever 
more  bitter  the  struggle  between  the  classes  which  sepa- 

185 


186  APPENDIX  B 

rates  modern  society  into  two  hostile  armies,  that  of  the 
capitalists  and  that  of  the  laboring  classes,  and  which  is  a 
characteristic  of  all  manufacturing  countries. 

The  chasm  between  the  proprietors  and  the  working 
class  —  those  who  possess  and  those  who  are  deprived  of  all 
means  —  being  still  more  widened  by  the  crises  resulting 
from  the  very  nature  of  the  capitalist's  methods  of  produc- 
tion, these  crises  grow  persistently  more  extensive  and 
more  destructive,  raising  the  general  uncertainty  to  the 
rank  of  a  normal  condition  of  society  and  proving  that 
the  productive  forces  have  outgrown  modern  society  and 
that  private  possession  of  the  means  of  production  has 
become  incompatible  with  their  appropriate  use  and  full 
development. 

Private  possession  of  the  implements  of  production, 
which  was  formerly  a  means  of  assuring  to  the  producer  the 
ownership  of  his  produce,  has  now  become  a  means  of  ex- 
propriating farmers,  artisans,  and  small  tradesmen  and  put- 
ting the  non-working — capitalists  and  great  land-owners — 
in  possession  of  that  which  is  produced  by  the  workers. 
Only  by  transforming  capitalized  private  possession  of  the 
means  of  production  —  such  as  land,  mines,  raw  materials, 
tools,  means  of  communication  —  into  collective  posses- 
sion and  by  making  the  production  of  goods  a  socialistic 
production  carried  on  for  and  by  society  can  it  be  possible 
to  bring  about  a  change  whereby  the  big  industry  and  the 
ever  growing  productive  capacity  of  co-operative  labor 
can  become  the  possession  of  the  classes  hitherto  exploited, 
and  be  transformed  from  a  source  of  misery  and  oppression 
into  a  source  of  the  utmost  prosperity  and  all-round  har- 
monious improvement. 

Such  a  social  reform  means  not  only  the  liberation  of  the 
laboring  classes  but  that  of  the  whole  human  race,  which 
suffers  under  the  present  conditions.  But  this  reform 


APPENDIX  B  187 

can  only  be  undertaken  by  the  working  class,  because  the 
other  classes,  in  spite  of  their  competing  interests,  all 
stand  on  the  ground  of  private  possession  of  the  means 
of  production,  under  which  plan  the  maintenance  of  the 
bases  of  present  society  is  of  great  importance. 

The  struggle  of  the  working  class  against  capitalist  ex- 
ploitation is  necessarily  a  political  struggle.  The  work- 
ing class  cannot  carry  on  its  economical  struggle  and  de- 
velop its  economical  organization  without  political  rights. 
It  cannot  transfer  the  means  of  production  from  the  few  to 
the  possession  of  the  whole  of  society  without  having 
obtained  political  power. 

To  give  unity  to  this  struggle  of  the  working  class,  to 
cause  it  to  be  realized,  and  to  point  out  its  natural  and 
inevitable  goal  —  such  is  the  task  of  the  Social-Demo- 
cratic party. 

The  interests  of  the  working  classes  are  identical  in 
every  country  which  has  capitalistic  methods  of  produc- 
tion. With  the  extension  of  the  world's  market,  the  posi- 
tion of  the  workmen  in  each  country  is  constantly  growing 
more  dependent  on  the  position  of  the  workmen  in  other 
countries.  The  liberation  of  the  workmen  is  therefore  an 
undertaking  in  which  the  workmen  of  all  civilized  coun- 
tries have  an  equal  interest.  Knowing  this,  the  Social- 
Democratic  party  of  Germany  feels  and  declares  itself  to 
be  at  one  with  all  workmen  loyal  to  their  class  in  other 
countries. 

The  Social-Democratic  party  of  Germany  struggles, 
therefore,  not  for  the  acquisition  of  new  class  privileges 
and  prerogatives,  but  for  the  abolition  of  the  supremacy 
of  classes,  as  well  as  of  the  classes  themselves,  and  for 
equal  rights  and  duties  for  all  without  distinction  of  sex 
or  birth.  Starting  from  this  point  of  view,  the  party  com- 
bats in  the  present  society  not  only  the  exploitation  and 


188  APPENDIX  B 

oppression  of  the  salaried  workers,  but  also  every  other 
kind  of  exploitation  and  oppression,  be  it  of  a  class,  a 
party,  a  sex,  or  a  race. 

Starting  from  these  principles  the  Social-Democratic 
party  of  Germany  demands,  first  of  all: 

(1)  A  general  and  direct  right  to  elect  and  vote  with  the 
secret  ballot,  for  every  member  of  the  empire  over  20  years 
of  age  irrespective  of  sex,  for  all  elections  and  ballots.     A 
proportional  electoral  system;  and,  until  the  introduction 
of  that,  a  new  legal  division  of  the  election  district  after 
every  census.     Legislative  periods  of  two  years'  duration. 
Elections  and  ballots  to  be  held  on  legal  holidays.     Sal- 
aries for  elected  representatives.     Abolition  of  every  re- 
striction of  political  rights  except  in  the  case  of  loss  of  civil 
rights. 

(2)  Direct  legislation  by  the  nation  by  means  of  the 
right  of  proposal  and  of  rejection.    Self-government  of  the 
nation  in  empire,  state,  province,  and  municipal  body. 
Election  of  authorities  by  the  people;  responsibility  of  the 
authorities.     Annual  tax  assessments. 

(3)  General  preparation  for  bearing  arms.     Militia  in 
place  of  permanent  armies.     War  and  peace  to  be  decided 
by  the  representatives  of  the  nation.     Settling  of  all  inter- 
national conflicts  through  arbitration. 

(4)  Abolition  of  all  laws  restricting  or  suppressing  the 
free  expression  of  opinion  and  the  right  of  association  and 
meeting. 

(5)  Abolition  of  all  laws  which  prejudice  woman's  pub- 
lic or  private  rights  as  compared  with  man's. 

(6)  Religion  to  be  declared  a  personal  matter.     Aboli- 
tion of  all  expenses  out  of  public  funds  for  religious  or 
church  purposes.     Church  and  religious  bodies  to  be  con- 
sidered as  private  associations  having  absolutely  inde- 
pendent control  of  their  affairs. 


APPENDIX  B  189 

(7)  Secularization  of  the  schools.     Compulsory  attend- 
ance at  the  public  common  schools  (Volksschulen).     In- 
struction, books,  and  food  in  public  common  schools,  as 
well  as  in  the  higher-education  establishments  for  those 
pupils,  both  male  and  female,  whose  capacity  proves  them 
worthy  of  further  education,  to  be  gratuitous. 

(8)  Proceedings  at  law  and  legal  assistance  to  be  gratu- 
itous.   Judgment  by  judges  elected  by  the  nation.    Ap- 
peal in  criminal  cases.     Indemnification  for  those  who, 
being   innocent,    are   accused,  arrested,  or   condemned. 
Abolition  of  capital  punishment. 

(9)  Gratuitous  medical  help,  including  midwifery  and 
medicine.     Gratuitous  burial  expenses. 

(10)  Graduated  increasing  revenue  and  estate  taxes  for 
payment  of  public  expenses,  in  so  far  as  the  latter  can  be 
covered    by  taxes.     Graduated  inheritance  tax  propor- 
tioned to  the  amount  of  inherited  property  and  the  degree 
of  relationship.     Abolition  of  all  indirect  taxes,  custom 
duties,  and  other  similar  measures  by  means  of  which  the 
interests  of  the  mass  are  sacrificed  to  the  interests  of  a 
privileged  minority. 

For  the  protection  of  the  working  class  the  Social- 
Democratic  party  demands,  first  of  all,  the  follow- 
ing: 

(1)  An  effective  national  and  international  legislation 
for  the  protection  of  workmen  on  the  following  bases : 

(a)  The  establishing  of  a  working-day  of  8  hours'  max- 
imum duration. 

(6)  Prohibition  of  trades  labor  for  children  under  the 
age  of  14. 

(c)  Prohibition  of  night  work  except  in  such  branches 
of  industry  the  very  nature  of  which,  either  for  technical 
reasons  or  reasons  of  common  welfare,  necessitates  night 
work. 


190  APPENDIX  B 

(d)  An  uninterrupted  rest  of  at  least  thirty-six  hours  in 
every  week  for  every  workman. 

(e)  Prohibition  of  the  truck  system. 

(2)  Supervision  of  all  industrial  establishments,  study 
and  regulation  of  the  conditions  of  work  in  town  and  coun- 
try by  a  national  labor  bureau,  district  labor  offices,  and 
labor  chambers.     Thorough  industrial  hygiene. 

(3)  Legal  equality  of  country  laborers  and  servants  with 
industrial  laborers;  removal  of  regulations  concerning  ser- 
vants. 

(4)  Security  of  the  right  of  coalition. 

(5)  Transfer  of  the  entire  workmen's  insurance  to  the 
state  under  effective  co-operation  of  the  workmen  in  the 
management. 


APPENDIX  C 
WILLIAM  II  AND  AMERICANS 

SOMETHING  responsive  in  the  American  temperament, 
something  uncalculating  and  light-hearted,  appears  to  at- 
tract a  monarch  living  in  a  hot-house  atmosphere,  served 
by  the  solicitous  courtier,  meeting  usually,  when  he  does 
meet  foreigners,  diplomatists  and  statesmen  who  do  not 
lay  aside  the  mask  even  with  so  candid  a  personality  as 
the  Emperor,  and  with  him  perhaps  least  of  all  because 
they  are  deep  in  the  great  political  manoeuvres  of  the 
Continent,  futile  and  yet  so  absorbing.  The  American 
seems  to  bring  fresh  air  and  thoughts  less  worn  than 
those  commonly  served  up  to  him  by  the  experienced  in 
dealing  with  kings.  He  finds  refreshment  in  turning  aside 
from  the  preoccupations  of  administration  and  politics 
and  seeing  how  old  questions  look  to  the  transatlantic  ob- 
server remote  from  the  divisions  of  German  thought,  who 
can  expect  nothing  except  an  interesting  hour. 

The  only  American  of  distinction  who  has  been  refused 
an  audience  with  the  Emperor  is  Mr.  William  J.  Bryan. 
This  came  about  through  Herr  von  Tschirschky,  then  for- 
eign secretary,  now  ambassador  at  Vienna.  The  Emperor 
probably  never  knew  of  the  refusal.  Herr  von  Tschirschky 
was  informed  by  the  American  ambassador  that  political 
rivalries  in  the  United  States  did  not  extend  to  social  rela- 
tions, and  that,  instead  of  being  annoyed  should  the  Em- 
peror receive  Mr.  Bryan,  the  President  would  no  doubt  be 
pleased.  But  Herr  von  Tschirschky  would  not  take  the 

191 


192  APPENDIX  C 

risk  of  recommending  to  his  Majesty  an  opponent  of  the 
President's.  The  episode  indicates  the  way  a  European 
statesman  looks  upon  opposition  to  the  administration. 
Herr  von  Tschirschkyonce  rather  complainingly  remarked: 

"It  seems  to  me  that  most  Americans  who  come  to 
Berlin  want  to  talk  with  the  Emperor." 

"Yes,  of  course  they  do,"  replied  the  American  ambas- 
sador. "  Every  American  feels  that  the  Emperor  belongs 
partly  to  him." 

It  has  been  often  something  like  a  game  between  the 
Emperor  and  his  own  appointees,  the  Emperor  desiring 
to  meet  interesting  people  freely  and  those  around  him 
raising  difficulties. 

When  the  Emperor  talks  of  American  things  he  does 
so  with  a  full  knowledge  of  the  country,  its  government, 
population,  topography,  railways,  and  political  and  social 
perplexities.  He  idealizes  all  and  sees  the  United  States 
in  their  potentialities  as  Americans  do.  This  ardor  of  ap- 
preciation in  so  convinced  a  monarchist  indicates  the  men- 
tal breadth  of  the  Emperor  as  a  man  and  his  faculty  of 
projecting  himself  with  sympathetic  insight  into  a  na- 
tional system  so  sharply  different  from  that  of  Germany. 
The  Emperor,  in  an  endeavor  to  realize  his  conviction 
that  Germany  and  the  United  States  may  learn  more 
from  each  other  than  from  other  countries,  has  caused  the 
government  to  send  about  eighty  representatives  of  the 
public  services  to  America  to  study  specific  questions,  such 
as  cotton  culture  in  the  South,  railway  organization,  edu- 
cation, factory  efficiency,  and  horse-breeding. 

Since  the  unfortunate  incident  in  Manila  harbor  between 
Admirals  Dewey  and  Diederich,  the  German  Government, 
and  that  is  to  say  the  Emperor,  in  general  foreign  policy 
has  taken  the  initiative  in  acts  of  good-will  toward  the 
United  States.  This  has  not  precluded  the  gentlemen  of 


APPENDIX  C  193 

the  foreign  service  from  being  tenacious  negotiators  when- 
ever differences  concerning  trade  have  arisen  between  Ber- 
lin and  Washington,  but  they  are  presumed  to  bear  in 
mind  always  the  Emperor's  determination  to  allow  no  con- 
troversy that  might  stir  national  passion  to  disturb  rela- 
tions which  are  meant  to  grow  into  something  much  more 
than  "correct."  Various  thought-out  considerations  sup- 
port this  consistent  attitude.  They  may  be  mentioned  in 
what  seems  to  be  their  order  of  importance. 

First.  The  imposing  strength  and  detached  position  of 
the  United  States  recognized  by  all  powers,  though  some- 
what more  clearly  perhaps  by  Germany  than  by  any 
other  except  Britain. 

Second.  The  desire  of  British  statesmen  since  the  early 
nineties  to  have  a  cordial  co-operative  understanding  with 
the  United  States.  This  desire  in  England  has  grown 
stronger  gradually  and  steadily  and  has  been  taken  into 
account  by  German  statesmen.  They  believe  that  the 
American  people  would  be  as  ready  as  any  other  to  form 
an  alliance  for  a  temporary  object  should  the  need  arise. 
The  German  Government  does  not  expect  to  form  an  alli- 
ance with  the  United  States  as  an  instrument  in  European 
politics,  but  it  is  of  decisive  importance  to  Germany  that 
the  United  States  and  Great  Britain  should  not  form  a 
close  political  understanding.  Germany  would,  therefore, 
hesitate  to  the  last  degree  before  taking  an  open  positive 
position  against  the  United  States  in  China,  in  South  or 
Central  America,  in  Liberia,  or  in  any  part  of  the  world. 
The  only  possibility  of  her  doing  so  would  be  some  com- 
pelling reason  in  Europe,  and  such  a  contingency  appears 
beyond  probability.  The  European  equilibrium  must  con- 
stantly occupy  the  thoughts  of  German  statesmen.  Ger- 
many is  strong,  but  she  has  two  powerful  enemies  and 
even  her  friends  and  allies  are  jealous  of  her.  Conse- 


194  APPENDIX  C 

quently  she  has  no  strength  to  employ  in  distant  parts  of 
the  world.  Even  the  diversion  of  three  or  four  army 
corps  in  some  South  American  adventure,  might  place  her 
in  deadly  danger.  She  must  keep  her  strength  on  sea  and 
land  intact  for  use  in  Europe,  while  her  diplomacy  must 
contrive  to  prevent  isolation.  Germany  simply  expects 
from  the  United  States  that  they  shall  remain  aloof  from 
the  controversies  of  Europe,  and  that  the  American  people 
shall  have  openness  of  mind  toward  Germany,  so  that  they 
would  judge  neutrally  the  merits  of  any  dispute  in  which 
Germany  might  be  engaged  in  Europe. 

Third.  The  United  States  might  join  in  the  financial 
mobilization  of  Germany.  The  United  States  is  reckoned 
upon  to  share  in  financing  the  great  war  in  expectation, 
always,  of  course,  for  a  profit.  Should  Germany  be  at  war 
with  England  and  France  the  money  markets  of  London 
and  Paris  would  be  closed  against  her.  Neither  Vienna, 
nor  Rome,  nor  Saint  Petersburg  has  much  money  to  lend, 
and  the  nations  of  which  those  cities  are  capitals  might  also 
be  allies  of  one  side  or  the  other  in  the  war.  Germany  would 
have  against  her  two  of  the  richest  peoples  in  the  world. 
The  only  other  rich  people  are  the  Americans,  looked  upon 
as  bold  investors  and  speculators.  They  would  be  ex- 
pected to  grasp  the  financial  bargains  the  Germans  would 
be  able  to  offer  them.  They  would  take  them  all  the 
more  readily  if  they  had  good-will  toward  Germany  and 
confidence  in  German  character  and  German  soundness. 


INDEX 


INDEX 


Allgemeine    ElektricitSts-Gesell- 

schaft,  92. 

Alsace-Lorraine,  19,  99. 
Altenburg,  75. 
Anhalt,  99. 
Artisans,  training  of,  49,  52;  future 

of,  55,  56. 
Austria,  50,  165. 

Baden,  its  navigation  lines,  7;  rail- 
ways of,  19. 

Balfour,  Mr.  Arthur,  159. 

Banks,  the  Dresdner,  5;  the  Deut- 
sche and  other  banks,  91. 

Bavaria,  3,  19,  37,  84. 

Berlin,  continuation  schools  in,  43, 
45;  its  labor  exchange,  62-65; 
banks,  91;  land  values  in,  113; 
academy  of  the  Social  Demo- 
crats at,  125;  elective  values  in, 
129;  its  miniature  country- 
places,  172-174. 

Berlin  Labor  Exchange,  62-68. 

Bethmann-Hollweg,  Herr  von,  114. 

Bismarck,  Prince,  on  the  doctrine 
of  the  right  to  work,  11;  on  state 
ownership  of  railways,  12,  13; 
quoted,  22;  on  emigration,  54- 
56;  his  schemes  of  government 
supervision,  56-58;  his  views  on 
socialism,  117-119,  136;  his  ad- 
vice to  the  Emperor,  145. 

Bosnian  -  Herzegovinian  annexa- 
tions, 165. 

Bremen,  24,  113. 

Bryce,  Mr.  James,  16. 

Bulow,  Prince,  122. 

Bundesrat,  on  railway  rates,  19,  21. 


Bundesraih,  the,  162. 
Bureaucracy,    the    German,    14, 
16. 

Carlyle,  Thomas,  41. 

Cassel,  75. 

Charlottenburg,  59,  85. 

China,  18. 

Civil  service,  14-16,  121;  caste 
spirit  of,  127. 

Cleveland,  President,  157. 

Collective  ownership,  2,  7,  8,  12. 

Cologne,  unemployment  insurance 
in,  75-78. 

Continuation  schools,  S3;  growth 
of,  41,  42;  compulsory  attend- 
ance at,  43,  44,  47,  48. 

Dawson,  W.  H.,  119;   quoted,  on 

Wagner,  138-143. 
Delagoa  Bay,  155,  157. 
Delbrueck,   Herr,   on  syndicates, 

97,98. 

Dietrich,  Herr,  110. 
Dortmund,  113. 
Dresden,  75. 
Dusseldorf.  60,  75,  80,  113. 

Elberfeld,  75. 
Erlangen,  75. 
Emigration,  54;  Bismarck  on,  55, 

56. 

Emperor,  the  (see  William  II). 
Empress  of  Germany,  her  interest 

in  domestic  work,  40,  41. 
England,  24,  39, 123, 133, 153,  163, 

164,  168. 
Essen,  60,  113. 


197 


198 


INDEX 


Fiacus,  the  Prussian,  57,  99. 

France,  8,  9,  33,  51,  70,  161,  164, 
165,  168. 

Frankfort,  104,  175. 

Franklin,  Benjamin,  39,  40. 

Frederick  the  Great,  14,  16. 

Frederick  William  II,  10  (see  Prus- 
sian common  law). 

Fuhrmann,  Herr,  110. 

Gamp,  Baron  von,  110. 

Germany,  3,  6,  7,  8;  civil  service 
in,  14,  15;  spirit  of,  41;  immi- 
grants and  emigrants,  53-56;  in- 
dustrial and  commercial  expan- 
sion, 54,  56, 57;  the  unemployed 
in,  69;  influence  of  society  and 
wealth  on  the  government,  121; 
change  of  institutions  in,  133; 
idea  of  war  distressing  to,  153, 
154;  its  military  prominence, 
165;  development  of  its  navy, 
155-167. 

Geyer,  Heir,  110. 

Great  Britain,  8,  34,  51,  153,  155, 
157,  163,  164,  165,  166,  167. 

Grimmelshausen,  154. 

Gymnastic  system,  German,  175, 
176. 

Hamburg,  24,  113. 
Hanover,  45. 

Hatzfeld,  Prince  von,  110. 
Hesse-Nassau,  45. 
Hohenlohe,  Prince,  156. 
Hohenzollerns,  9,  14,  40,  116. 
Hollman,  Admiral,  156. 
Holstein,  Baron  Fritz  von,  149. 
Honeymoon,  the  walking,  175. 

Immigration,  53,  54. 

Imperial  Gazette,  The,  Kriiger  tele- 
gram, 156. 

Industrial  and  commercial  expan- 
sion, 56. 


Institutions,  German,  changes  in, 

133,  135. 
Italy,  50,  161,  168. 

Jameson  raid,  the,  155. 

Japan,  166. 

Jastrow,  Herr  Dr.,  85,  86. 

Karlsruhe,  75. 

Kerschensteiner,  Dr.,  38. 

Kiel,  113. 

Kingsley,  Charles,  41. 

Koenigsberg,  113. 

KrUger,  President,  155;  despatch 

from  Emperor  William,  156. 
Krflger  telegram,  the,  155. 
Krupp  gun  and  armor  works,  92. 

Labor  exchanges,  58;  at  Berlin  and 
other  cities,  59,  60;  use  of  public 
funds,  61;  at  Berlin,  62-65. 

Laborers,  foreign  agricultural,  49, 
50. 

Land,  increased  value  of,  109;  pro- 
posed tax  on,  110-114. 

Lanz  Machinery  Company,  Mann- 
heim, its  system  of  insurance,  81, 
82. 

Lassalle,  Ferdinand,  56,  137. 

Leipsic,  78. 

Levant,  the,  17;  railway  rates  in, 
28. 

Liibeck,  24,  75. 

Magdeburg,  60,  75. 

Mahan,  Captain,  his  "  Influence  of 
Sea  Power  on  History,"  161. 

Marschall,  Baron  von,  156. 

Marx,  137. 

Mayence,  75. 

Mecklinburg-Strelitz,  3,  7. 

Moeller,  Herr,  quoted,  on  syndi- 
cates, 96,  98. 

Moltke,  von,  160. 

Momseu,  Herr,  110. 


INDEX 


199 


Morocco,  18,  165. 
Muller-Meiningen,  Dr.,  110. 
Munich,  38,  39,  75.  80. 

Nachtasyl,  71. 

Napoleon,  153,  165. 

Nature-cult,  the  German,  174, 175. 

Navy,  the  German,  one  argument 
for,  18;  effect  of  the  Kriiger  tele- 
gram on,  155;  need  of,  160,  161; 
seizure  of  the  Bundesrath,  162; 
Great  Britain  affected  by,  166, 
167. 

Nehbel,  Herr,  110. 

Oldenburg,  3. 

Paasche,  Dr.,  110. 

Persia,  18. 

Pitt,  the  elder,  164. 

Poland,  50. 

Posadowsky-Wehner,  Count,  on 
unemployment  insurance,  83;  on 
syndicates,  95,  96. 

Posen,  45. 

Pretoria,  155. 

Prussia,  state  incomes  of,  3-5;  its 
policy  toward  state  ownership, 
4-6;  common  law  of,  9-11;  rail- 
way administration,  13,  20,  21; 
continuation  schools  in,  44;  atti- 
tude toward  syndicates,  97,  98; 
electoral  power  in,  130. 

Prussian  Ministry  of  Commerce, 
its  view  on  manual  training,  38, 
44. 

Quedlinburg,  75. 

Railway  systems,  German,  state, 
13-15;  the  government's  use  of 
private  and  state-owned,  18-32; 
exceptional  rates,  22-25;  rail 
and  sea  rates,  26-28;  dividends 
of,  29,  30. 


Reichstag,  the,  54;  unemployment 
insurance,  82;  increased  land 
values,  109-115;  criticism  of 
Emperor,  122;  Social-Democrat 
elections,  131,  133;  adopted 
naval  programme,  162. 

Reinickendorf,  112. 

Rendsburg,  59. 

Reuss,  the  elder,  3. 

Rheinbaben,  Baron  von,  89. 

Roberts,  Lord,  166. 

Rodbertus,  137. 

Roesike,  Herr,  110. 

Rostock,  75. 

Ruskin,  41. 

Russia,  16,  24,  50,  132,  160,  165. 

Saxony,  3,  7,  19. 

Schaeffle,  137. 

Schaumberg-Lippe,  3. 

Schmoller,  Gustav,  8;  on  syndi- 
cates, 98,  99,  102;  economic 
philosophy  of,  119,  136,  137. 

Schoenberg,  137. 

Schwarzburg-Rudolstadt,  3. 

Schwarzburg-Sonderhausen,  8. 

Schwerin-Loewitz,  Count  von,  110. 

Sieg,  Herr,  110. 

"Simplicius  Simplicissimus"  (see 
Grimmelshausen),  154. 

Skarzynski,  Dr.  von,  110. 

Socialism,  monarchical  enterprises, 
1-7;  and  Bismarck's  plans  for, 
56;  and  progress  of,  117;  and 
strength,  128;  principles  of,  137; 
aristocratic,  122,  127;  working- 
men's,  123;  two  schools,  132. 

Social-Democratic  party,  1,  2;  on 
compulsory  school  attendance, 
43;  on  syndicates,  104-106; 
"social  offence"  of  its  members, 
122;  power  of,  123;  its  organ- 
ization, 124-126;  agitations  of, 
128,  129;  election  results,  131; 
programme  of,  131,  132. 


200 


INDEX 


South  Africa,  the  German  in  com- 
petition in,  17;  rate-books,  28. 

South  America,  Germans  in,  13. 

Spahn,  Dr.,  110. 

Stettin,  113. 

Strasburg,  75,  79. 

Stucklen,  Herr,  110. 

Sudekum,  Dr.,  110. 

Syndicates,  German,  coal  and  iron, 
5,  93;  friendly  attitude  of  the 
government  toward,  18;  their 
extent,  90;  participation  in  of 
banks,  90,  91;  contracts,  92,  93; 
industries  controlled  by,  94; 
state  and  imperial  government 
members  of,  97;  forced  combina- 
tion of  potash-mine  owners,  99, 
100;  creation  of  government, 
101-104;  good-will  of  various 
interests,  107. 

Thuringia,  112. 
Times,  The,  41,  156,  157,  158. 
Trade  policy,  national,  17-19. 
Trade  competition,  166. 
Trade-schools,  33;  pupils'   fitness 

for,  35-37. 
Trades-unions,  insurance  schemes, 

78-80;  group-consciousness,  126. 
Transvaal,  the,  156,  159. 
Turkey,  18. 

Unemployment  insurance,  govern- 
ment  policy  toward,  73-75; 
cities  where  it  is  in  operation,  75- 
80;  Lanz  Machinery  Company 


system  of,  81,  82;  action  of  the 
Reichstag,  82;  Bavaria's  com- 
mission on,  84. 

United  States,  5,  8,  15,  28,  32,  34, 
51,  70,  92,  106,  123,  133,  153, 
161,  166. 

Viktoria,  40. 

Wagner,  Adolph,  8, 102;  economic 
philosophy  of,  119, 120, 136, 137; 
his  programme  for  political  ac- 
tion, 140-143. 

Weber,  Dr.,  110. 

Werder,  cherry-trees  at,  176. 

Wermuth,  Herr  von,  on  taxing  the 
increase  in  land  values,  109-115. 

Wernigerode,  75. 

Westphalia,  60. 

Wiemer,  Dr.,  110. 

Wiesbaden,  59,  60. 

William  I,  120,  136. 

William  II,  on  the  right  of  the 
state  to  take  over  mines,  4,  5; 
his  passion  for  efficiency,  16;  his 
book-binding,  40;  democrat  and 
monarchist,  116;  monarchical 
socialist,  119-121;  his  frankness, 
145;  his  attention  to  duties,  146, 
147;  great  vitality  of,  148,  149; 
his  administration,  149-151 ;  im- 
pressed by  Captain  Mahan's 
"Influence  of  Sea  Power  on  His- 
tory," 161. 

Wright,  Orville,  148. 

WUrtemburg,  3,  7,  19. 


HC 


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